Step 1: Understanding the Concept:
Lactose is a disaccharide sugar composed of galactose and glucose, commonly found in milk.
Most yeast species lack the enzyme $\beta$-galactosidase (lactase) required to hydrolyze lactose into its constituent monosaccharides.
Yeast strains capable of fermenting lactose are particularly significant in dairy biotechnology for the production of single-cell proteins, ethanol, and fermented beverages.
Step 2: Detailed Explanation:
Among the options listed, Kluyveromyces fragilis (now often designated as Kluyveromyces marxianus) is well-known for its high $\beta$-galactosidase activity.
This enzyme enables the yeast to rapidly hydrolyze lactose and utilize the resulting glucose and galactose for metabolic pathways, resulting in ethanol and carbon dioxide production.
Saccharomyces cerevisiae, despite being a robust fermenter of hexose sugars like glucose and sucrose, lacks the necessary transport systems and enzymes to utilize lactose.
Candida lipolytica is highly lipolytic and primarily breaks down lipids rather than lactose.
Thus, Kluyveromyces fragilis is the primary choice for lactose fermentation in industrial dairy applications.
Step 3: Final Answer
The correct option is (B).