Step 1: Understanding the Concept
Steel is iron with a small amount of carbon. Carbon atoms are much smaller than iron atoms, so they can fit into the empty spaces (interstices) of the iron lattice.
Step 2: What kind of defect is this
When a foreign atom sits in a void of the crystal instead of replacing a host atom, the defect is called an interstitial impurity defect.
Step 3: Check the options
(A) Substitutional impurity defect: the foreign atom takes the place of a host atom, as in brass. Not the case for carbon in steel.
(B) Interstitial impurity defect: the small carbon atoms occupy gaps in the iron lattice. This is correct.
(C) Vacancy defect: a lattice site is empty. This is a different defect.
(D) Schottky defect: equal numbers of cations and anions are missing, seen in ionic solids like NaCl.
Final Answer:
Carbon atoms occupy gaps in the iron lattice, an interstitial impurity defect, option (B).
\[ \boxed{\text{Interstitial impurity defect}} \]