Explanation
The /cacheroot property under /cache in the dispatcher.any file identifies the directory where cached files are stored. It is a relative or absolute path to the cache root directory. The dispatcher creates a subdirectory for each virtual host under this directory and stores thecached files there.
References:https://experienceleague.adobe.com/docs/experience-manager-dispatcher/using/configuring/dispatche

Explanation
Option B is a potential fix for the issue. Option B uses the data-sly-attribute block statement to add the href attribute to the anchor tag. The data-sly-attribute statement uses an expression to append ".html" to the item.path value. This way, the link will have the correct extension and will resolve to the corresponding page.
References:https://experienceleague.adobe.com/docs/experience-manager-htl/using-htl/htl-block-statements.htm

Explanation
The configuration in DNS (Domain Name System) should be used to resolve the domain name by dispatcher.
The DNS resolves the domain names to the IP address of the web server that hosts the dispatcher. The dispatcher then matches the incoming request URL with the cached files or the AEM publish instances.
References:https://experienceleague.adobe.com/docs/experience-manager-dispatcher/using/configuring/dispatche