A flare (or arresting of the sink rate) can't be initiated before the threshold because of any protruding equipment (say light poles). That's why they included option C) as a trick answer.
If the high sink-rate flare were to take the same duration as a normal flare, the sudden increase in pitch would increase the AoA considerably and risk (or even cause) a stall.
So the flare needs to be more gradual and to start higher, eating up more runway.
Vref is normal during this steep approach test / technique demonstration (video link below).
You can watch an A318 flying steep approachs from multiple angles including the cockpit here (YouTube). Custom automated call-outs are installed. See how high the callout "Standby, Standby, Flare," is commanded. Do note the overrun area at London City, if it weren't there the landing would have been much longer.