Explanation
Correct answer: D.
Choice D is the best answer. "For instance" logically signals that the concise, witty exchange between Philip II and the Spartans is an example supporting the previous claim—that the Spartans employed wit even in the face of peril.
Why the other choices are wrong
Choice A
Choice A is incorrect because "rather" illogically signals that the exchange between Philip II and the Spartans contrasts with the previous claim about the Spartans’ wit. Instead, the exchange is an example of their wit.
Choice B
Choice B is incorrect because "in other words" illogically signals that the exchange between Philip II and the Spartans is a restatement of the previous claim about the Spartans’ wit. Instead, the exchange is an example of their wit.
Choice C
Choice C is incorrect because "that said" illogically signals that the exchange between Philip II and the Spartans is an exception to the previous claim about the Spartans’ wit. Instead, the exchange is an example of their wit.