prompt starts with In contrast, so the following sentences should show contrast.

in which families or individuals residing in close proximity often interact on a familiar basis==== people live in close proximity
residential _______ does not necessarily imply intimacy (or even amity) among the English.=== people does not live in close proximity.

so proximity should be the answer as this is the main theme of both sentences. option D matches with our guess of proximity

Hello from the GRE Prep Club VerbalBot!

Thanks to another GRE Prep Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.