Final answer:
Transport-layer demultiplexing identifies the destination application for incoming data segments based on port numbers, directing the traffic to the correct service on the destination server.
Step-by-step explanation:
Transport-layer demultiplexing refers to the process by which the transport layer protocol, such as TCP or UDP, identifies the correct receiving application for incoming data segments. When an IP packet arrives at a host, the transport layer examines the segment's header to determine the destination port number. This port number is then used to forward the data to the proper application using a unique socket.
To be more specific, for option C) Identifying the destination application from incoming data, this is indeed what transport-layer demultiplexing does. When a server hosts multiple services, such as a web server (HTTP) and an email server (SMTP), they are distinguished by their port numbers, like 80 and 25 respectively. Demultiplexing allows the server to direct traffic to the right service based on these port numbers.