Final answer:
Polysemy in a homonym means the word has multiple meanings, even though it is spelled and pronounced the same way.
Step-by-step explanation:
When a homonym exhibits polysemy, it has multiple meanings. Homonyms are words that have the same spelling and pronunciation but can have different meanings. They are different from homographs, which have the same spelling but can have different pronunciations and meanings, and homophones, which sound the same but may have different spellings and meanings. So the correct answer to the question 'What does it mean when a homonym is polysemy?' is C) Multiple meanings.