Concept:
A Normalized Digital Surface Model (nDSM) represents the height of objects above the ground surface.
It is obtained by subtracting the ground elevation (DTM) from the surface elevation (DSM).
Step 1: Understand the models.
• DSM (Digital Surface Model): Includes buildings, trees and terrain.
• DTM (Digital Terrain Model): Represents only the bare earth.
Step 2: Compute nDSM.
\[
\boxed{
\text{nDSM}=\text{DSM}-\text{DTM}
}
\]
This gives the height of above-ground objects.
Hence,
\[
\boxed{\text{Normalized Digital Surface Model = DSM - DTM}.}
\]
Therefore, the correct option is
\[
\boxed{(B).}
\]