According to the Agile Practice Guide (jointly developed by PMI and Agile Alliance) and the Scrum Guide, Agile projects are centered around the delivery of a Potentially Shippable Product Increment.
Why Choice B is correct: In Agile, functionality that meets the Definition of Done (DoD) and has been reviewed/accepted by the stakeholders during the Sprint Review can be released. One of the core principles of the Agile Manifesto is " Working software is the primary measure of progress. " If a specific user story or feature is complete and provides value, it should not be held back by other features that are not yet finished.
Agile allows for decoupled releases, where deployment to production can happen independently of the Sprint cycle, provided the increment is stable and valuable.
Analysis of other options:
A (Demo the incomplete feature at the sprint retrospective): This is incorrect. The Sprint Retrospective is for process improvement (team, tools, and relationships), not for product demonstrations. Demos only occur in the Sprint Review.
C (Wait to complete all user stories that are in development): This contradicts the Agile principle of iterative delivery. Waiting for all stories to be finished mimics a Waterfall " Big Bang " release and delays the realization of value.
D (Continue with sprints until the product backlog is empty): A Product Backlog is a living document and is rarely " empty. " Waiting for every possible item to be finished before deploying would prevent the team from receiving early ROI and user feedback.

The team should move the completed, reviewed items to production (or the " Done " column) and move the incomplete functionality back to the Product Backlog or into the next Sprint Backlog to be addressed in a future iteration.