You can increase the compute capacity of an app by adding instances of the app. is correct
You can increase the compute capacity of an app by adding memory to an instance of the app. is incorrect. While vertical scaling (scaling up) by adding more resources like memory to an instance is possible in Azure, this statement is incorrect in the context of the question. Adding memory to a single instance does not directly increase the compute (CPU) capacity of the app.
You can increase the compute capacity of an app by defragmenting the local drive. is incorrect. Defragmenting a local drive is a maintenance task for traditional hard drives and has no direct impact on the compute capacity of a cloud application. In Azure, compute capacity is managed through scaling resources, not through disk maintenance.
None of the statements are true. is incorrect. This is incorrect because at least one statement is true - you can increase compute capacity by adding instances of the app (horizontal scaling).