"C" is the correct answer. The question is asking for the events for "offloading", not for "inspecting". Therefore the correct sequence is...
1) Sample packets sent to ITO
2) ITO instructs Smart NIC to inspect or bypass (bypass is the same as saying "offload")
3) Smart NIC forwards flow directly to destination (this is call "offloading" and bypasses inspection)
Check out "Figure 2: ITO offload use case" in this blog:
https://live.paloaltonetworks.com/t5/community-blogs/boost-vm-series-performance-with-smartnic-integration/ba-p/413658
Key word in the question is "offloading". The whole purpose of the ITO is to not inspect traffic that doesn't need it, to speed up the flow through the firewall. So, what is the sequence to offload? ITO decides traffic doesn't need inspection, so directs smart NIC to bypass. Answer 'C'.
For each new flow on the network, the Intelligent Traffic Offload service determines whether or not the flow can benefit from security inspection. The determination is made based on either policy or the flow’s inability to be inspected (i.e., encrypted traffic). If the flow is deemed unfit for inspection, it is offloaded to the Smart NIC, saving the need for the firewall to analyze it, which reduces load on the firewall and increases performance.
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