The institutional nature of the town meetings in many New England communities serves as a ready-made forum for discussion of topics ranging from local zoning ordinances to the Nuclear Freeze Campaign.
A) The institutional nature of the town meetings in many New England communities serves as
B) The institution of the town meetings in many New England communities serve to be
C) Institutionally, the town meetings in many New England communities serve as
D) The town meeting, an institution in many New England communities, serves as
E) In many New England communities, the town meeting, an institution, serves to be
The easiest place to start is probably with the split between "serve" and "serves." When the subject of the split verb is not itself underlined, it is often enough just to ask "what performs that verb" and to match the verb to that subject. Here, though, the subject is underlined as well, and so we have to be more careful.
In A, the subject of the singular verb "serves" is the singular noun "nature." Those agree.
In B, the subject of the plural noun "serve" is the singular noun "institution." ELIMINATE.
In C, the subject of the plural verb "serve" is the plural noun "meetings." Those agree.
In D, the subject of the singular verb "serves" is the singular noun "meeting." Those agree.
In E, the subject of the singular verb "serves" is the singular noun "meeting." Those agree.
Hmm...that wasn't terribly helpful.
I'd next do what I don't generally like to do: eliminate each wrong answer based on it's own unique faults.
Let's eliminate A, because it is the meeting, rather than the institutional nature of the meeting, that actually serves as a forum.
Let's eliminate C, because it's unclear what, if anything, the adverb "institutionally" means here.
Let's eliminate E because of the unidiomatic "serves to be."
That leaves D.
Edited to address Jp27's question.
See the second
American Heritage definition, or the fourth
Century Dictionary definition here.
https://www.wordnik.com/words/institution