What is the significance of this quote from the text? "Of course, they were both wrong. I understood it perfectly, and I remember it all very clearly. But I put it happily away, because it had all happened to a girl called Cynthia, and I never was really particularly interested in her.

The only other point to consider is whether Santha herself (the little girl narrating the story) also has an epiphany or major realization. Again, I would say that she does not. The adult Santha writing the story clearly understands its significance, which is why she's telling the story, but the young Santha narrating the tale understands what's going on and doesn't care:

Mother said, “Do you suppose she understood all that?” Premila said, “I shouldn’t think so. She’s a baby.”

Mother said, “Well, I hope it won’t bother her.”

Of course, they were both wrong. I understood it perfectly, and I remember it all very clearly. But I put it happily away, because it had all happened to a girl called Cynthia, and I never was really particularly interested in her.

Explanation:

the answer is the second one.