Concept:
In GIS, spatial data is stored in two main models: the raster model (a grid of pixels) and the vector model (points, lines and polygons). Moving data from one model to the other is called data conversion.
Step 1:
Here we start from a pixel (raster) image and want to describe it using points, lines and polygons, i.e. convert raster data into the vector form.
Step 2:
This raster-to-vector conversion is part of the image handling/processing workflow used to extract clean geometric features from a pixel image.
Answer: Option (3) — Image processing (as marked in the official answer key).