Step 1: Recall the real world fact first.
In reality, a fruit grows on a tree. So before applying any code, the plain answer is 'tree'.
Step 2: Apply the given code words one at a time.
The question tells us 'tree' is called 'sky' in this code. So wherever the real answer is 'tree', the coded answer must be 'sky'.
Step 3: Check the other code words do not affect this answer.
The remaining code changes, 'water' to 'food' and 'food' to 'tree' and 'sky' to 'wall', deal with other words and do not change what we found for 'tree'.
Step 4: Match with the given options.
Since 'tree' is coded as 'sky', the fruit is said to grow on 'sky' as per this code, which is option D.
Final Answer:
A fruit grows on 'sky' in this code. \[ \boxed{\text{Sky}} \]