context: I'm looking at your family picture
Laurel inquires, "Who are they?"[Quoted]
Laurel inquired who they are. [Reported]
'Who are they?' - An interrogative sentence.
Wh- + an auxiliary verb (be) + subjective pronoun,
The answer would be, Subjective pronoun + verb (be) + object [Direct/Indirect]
i.e., They are my family.
Therefore, option 4 is right
We know, Family is a collective noun.
It could be treated as an individual unit or as a collective one.
Therefore, option 1 is right
since It [a subjective personal pronoun that agrees with singular verb]
We use the word 'this' to point out a person or an object which is close to you. On the other hand, 'that' is used to point out a person or an object which is farther from you.
Option 2 & 3 are right.