I feel that this is a bit of a highly subjective question.

When we think of an artist, we think of people who are highly imaginative whose wild minds take them away from the reality of the world. The word "while" in this sentence however signifies that Picasso's mind worked in a way much closer to the way most "non-artsy" minds work. Now you have to look for a word that best characterizes the opposite of an imaginative mind. Iterative works because it means repetitive which is not an adjective associated with an imaginative mind.

Answer B

1. The part of the sentence related to blank is:
While it is tempting to think that artists like Picasso literally see the world in a markedly different way,

2. "While" at the beginning implies, we have to find a word that conveys a meaning that is opposite of "markedly different way"

ans B is correct

_________ movement from roughly realist sketches toward his famous Cubist style through a series of ever more abstract steps

from realistic sketches to abstract (imaginative) steps, so it means from real to imaginenative and it happend agaian and again to form his idea; thats why iterative works well