Final answer:
On the command 'REST', members of a military formation may move about freely, indicating relaxation from the position of attention.
Step-by-step explanation:
The positions of rest in a military formation include parade rest, at ease, rest, and fall out. On the command "REST", members of the formation may move about freely, which corresponds with the option C. This command allows the individuals within the formation to relax from the position of attention, but they must remain in place without talking unless otherwise specified by a superior. Understanding these different positions and their associated commands is a fundamental aspect of military drill and ceremonies, which are often part of basic training programs.