Vatican city is considered an enclave because it is
a.
completely surrounded by rome, italy
b.
geographically separated from the mainland of italy
c.
a self-governing region within another state
d.
occupied by the roman catholic church

Enclave means a small territory sorrounded by a bigger one and whose inhabitants are culturally different.

So the answer would be A.
B isn't right, because it is not geographically separated. 
C, it is indeed a self-governing region within another state but it doesn't mean that the culture are different.
D. it is indeed, but in the definition of Enclave, it isn't fully relevant, because we want to know if one territory in inside another who is culturally different.