The correct answer is D) It receives digital outputs from the binary device sensors and conditions these as digital signals for CPU processing. This is the correct answer because the "DIGITAL CONTACT" output system block represents the interface that receives digital signals from binary device sensors (e.g., on/off switches, relays) and conditions them as digital signals for processing by the central processing unit (CPU) in the digital control system. The other options are incorrect because they do not accurately describe the function of the "DIGITAL CONTACT" block. Option A refers to analog outputs, Option B describes converting digital to analog signals, and Option C describes converting analog to digital signals, which are not the functions of the "DIGITAL CONTACT" block as depicted in the illustrated block diagram.