Final answer:
The distinction between similar-looking words like "car" and "ear" is achieved through Phonological processing, which decodes sounds and understanding the different phoneme nuances in a language.
Step-by-step explanation:
When we distinguish between similar-looking words such as "car" and "ear," we are engaging in Phonological processing. Phonological processing involves the decoding of sounds and understanding the nuances of different phonemes, which are the most basic units of sound in a language and crucial for distinguishing between words. Words are formed by combining these various phonemes, and it is the basis for auditory recognition and representation of written words when reading. Therefore, the correct answer to the question is A) Phonological processing.