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This section asks you to state the capacity in which you are applying, for example as an individual, a limited company, a recognised club, a charity etc. You can only apply in one of these capacities so should only tick one box.
If you are applying as a person described in (a) or (b) you must also tick one of the 3 boxes at the end of this question. For the majority of applicants, the first box will apply (i.e. the applicant will be carrying on or proposing to carry on a business). An application pursuant to a 'statutory function' might be an application made by an agency of the government (e.g. the passport agency). An application pursuant to a 'function discharged by virtue of Her Majesty's prerogative' might be an application made by the government (e.g. by a Secretary of State).
You should then give further details in either section (A) individual applicants or section (B) other applicants, but not both.