At the corner stood a sort of decayed inn with the dingy sign of the grapes. the signboard was dark and indecipherable by now, and hung black against the sky and the gray moorland beyond, about as inviting as a gallows. march remarked that it looked like a tavern for vinegar instead of wine. why does the author choose to include details about the grapes inn? to provide a flashback that explains how the man died to inject some level of dark humor into the story to reinforce the dark and somber mood of the story to create tension and mistrust between the characters

The excerpt from this story describes a scene that is dark and kind of depressing, huh? "Decayed inn", "dingy sign", the sign was "dark and indecipherable...black" and not exactly happy and bright. 

Your first option suggests that this is a flashback to how the man died. There is no mention in this piece of how a person died or that this is a flashback. 

While this excerpt certainly has a dark tone and feel, there doesn't seem to be much humor in it.

The mood of this story certainly feels dark and gloomy. The description of the inn, sky, and background can give the reader a mental image of a someplace that isn't really friendly or inviting.

The final option suggests mistrust or difficulties that characters are having. This paragraph does not mention the feelings of characters, but more focuses on the setting.

The best option for this question would be the third one, to reinforce the dark and somber mood of the story.