Final answer:
Swelling and filling of the alveoli with fluid in acute respiratory distress syndrome happen during the exudative phase, which is characterized by increased permeability and fluid effusion into alveolar spaces.
Step-by-step explanation:
The swelling in the interstitial space that begins to fill the alveoli with fluid occurs during the exudative phase of acute respiratory distress syndrome (ARDS). At the onset of this phase, the alveolar-capillary barrier becomes damaged due to inflammation, resulting in increased permeability. The exudative phase is characterized by the effusion of fluid into the alveolar spaces, reducing gas exchange and leading to hypoxemia, which is a hallmark of ARDS. Therefore, the correct answer to the question is B. The exudative phase.