I don't think there is an explanation in this case for why the other choices are incorrect, The fact is 'what is now' fits the blank correctly. English is not mathematics. It is not always logical.
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sb70012In the early 1800s, the western part of ……. the United States was unknown to most Americans.If you parse the main part of the sentence, you should come up with something like
sb70012Is "what" considered a relative pronoun in my original question?It's called a fused relative.