AcesA
Doesn't "its/their" refer to "character/characters" ?
Yup!
(A) basically says that "each character [is] a miniature calligraphic composition inside
each character's own square frame." The word "each" indicates that we're talking about one character at a time, a bit like a loop in a computer program if that helps at all (for example: "inside
its square frame,
character #9,999 is a miniature calligraphic composition").
We use the singular pronoun "its" because we are referring to the individual characters, not the characters as a whole. There are tens of thousands of square frames (one for each character), not one square frame that houses ALL of the characters. And there are tens of thousands of miniature calligraphic compositions (again, one per character), not one SINGLE composition made up of all of the characters together. That's why each/its makes sense in (A).
I hope that helps!