Explanation
Locator ID Separation Protocol (LISP) is a network architecture and protocol that implements the use of two namespaces instead of a single IP address:
+ Endpoint identifiers (EIDs)-assigned to end hosts.
+ Routing locators (RLOCs)-assigned to devices (primarily routers) that make up the global routing system.
Reference: https://www.cisco.com/c/en/us/td/docs/iosxml/
ios/iproute_lisp/configuration/xe-3s/irl-xe-3s-book/irl-overview.html

Explanation
Weighted Random Early Detection (WRED) is just a congestion avoidance mechanism. WRED drops packets selectively based on IP precedence. Edge routers assign IP precedences to packets as they enter the network. When a packet arrives, the following events occur:
The average queue size is calculated.
2. If the average is less than the minimum queue threshold, the arriving packet is queued.
3. If the average is between the minimum queue threshold for that type of traffic and the maximum threshold for the interface, the packet is either dropped or queued, depending on the packet drop probability for that type of traffic.
4. If the average queue size is greater than the maximum threshold, the packet is dropped.
WRED reduces the chances of tail drop (when the queue is full, the packet is dropped) by selectively dropping packets when the output interface begins to show signs of congestion (thus it can mitigate congestion by preventing the queue from filling up). By dropping some packets early rather than waiting until the queue is full, WRED avoids dropping large numbers of packets at once and minimizes the chances of global synchronization. Thus, WRED allows the transmission line to be used fully at all times.
WRED generally drops packets selectively based on IP precedence. Packets with a higher IP precedence are less likely to be dropped than packets with a lower precedence. Thus, the higher the priority of a packet, the higher the probability that the packet will be delivered.
Reference: https://www.cisco.com/c/en/us/td/docs/ios-xml/ios/qos_conavd/configuration/15- mt/qos-conavd-15-mt-book/qos-conavd-cfg-wred.html WRED is only useful when the bulk of the traffic is TCP/IP traffic. With TCP, dropped packets indicate congestion, so the packet source will reduce its transmission rate. With other protocols, packet sources may not respond or may resend dropped packets at the same rate. Thus, dropping packets does not decrease congestion.
Reference: https://www.cisco.com/c/en/us/td/docs/ios-xml/ios/qos_conavd/configuration/xe-
16/qos-conavd-xe-16-book/qos-conavd-oview.html
Note: Global synchronization occurs when multiple TCP hosts reduce their transmission rates in response to congestion. But when congestion is reduced, TCP hosts try to increase their transmission rates again simultaneously (known as slow-start algorithm), which causes another congestion. Global synchronization produces this graph:

Explanation
The EIGRP Over the Top solution can be used to ensure connectivity between disparate EIGRP sites. This feature uses EIGRP on the control plane and Locator ID Separation Protocol (LISP) encapsulation on the data plane to route traffic across the underlying WAN architecture. EIGRP is used to distribute routes between customer edge (CE) devices within the network, and the traffic forwarded across the WAN architecture is LISP encapsulated.
EIGRP OTP only uses LISP for the data plane, EIGRP is still used for the control plane. Therefore we cannot say OTP uses LISP encapsulation for dynamic multipoint tunneling as this requires encapsulating both data and control plane traffic -> Answer 'OTP uses LISP encapsulation for dynamic multipoint tunneling' is not correct.
In OTP, EIGRP serves as the replacement for LISP control plane protocols (therefore EIGRP will learn the next hop, not LISP -> Answer 'LISP learns the next hop' is not correct). Instead of doing dynamic EID-to-RLOC mappings in native LISP-mapping services, EIGRP routers running OTP over a service provider cloud create targeted sessions, use the IP addresses provided by the service provider as RLOCs, and exchange routes as EIDs. Let's take an example:

If R1 and R2 ran OTP to each other, R1 would learn about the network 10.0.2.0/24 from R2 through EIGRP, treat the prefix 10.0.2.0/24 as an EID prefix, and take the advertising next hop 198.51.100.62 as the RLOC for this EID prefix. Similarly, R2 would learn from R1 about the network 10.0.1.0/24 through EIGRP, treat the prefix 10.0.1.0/24 as an EID prefix, and take the advertising next hop 192.0.2.31 as the RLOC for this EID prefix. On both routers, this information would be used to populate the LISP mapping tables. Whenever a packet from 10.0.1.0/24 to 10.0.2.0/24 would arrive at R1, it would use its LISP mapping tables just like in ordinary LISP to discover that the packet has to be LISP encapsulated and tunneled toward 198.51.100.62, and vice versa. The LISP data plane is reused in OTP and does not change; however, the native LISP mapping and resolving mechanisms are replaced by EIGRP.
Reference: CCIE Routing and Switching V5.0 Official Cert Guide, Volume 1, Fifth Edition