A simile is a figure of speech that is used to explicitly compare two elements of a different kind. Within this excerpt, the explicit comparison is:
his brown skin hung in strips
like ancient wallpaper,
and its pattern of darker brown
was like wallpaper:
Therefore, the statement that best describes the effect of simile on the overall meaning in this excerpt is C. It compares the fish's skin to wallpaper to support the image of a shabby but admirable fish because it conveys the image of a ragged, damaged but tremendous fish.