There is a source and destination IP address, each is 32 bits. Within each 32 bits we identify the subnetwork and the host within the subnetwork. Class C is for smaller subnetworks i.e., there are fewer hosts within the subnetwork. These are significant since the subnetwork identity is used in routing decisions and routing is less complicated if there are a smaller number of bits to identify the subnetwork identities. Of course the overall algorithm is more complicated since there is now either 8 bits or 16 bits and IP must identify if 8 or 16 are being used for any particular subnetwork, etc.
Class D is used for a multicast address when messages are sent to multiple hosts simultaneously.
Again this is related to performance and is not usually under user control. Describe the different routing options. The record route option asks each gateway to record its address. This can be used in determining shortest routes. The source route option asks the source to to identify a particular route to be used.