Provisioning additional servers or instances so that traffic and workloads are distributed across multiple hosts is correct.

Scale out refers to increasing capacity by adding more machines or instances so that work can be distributed across multiple hosts. This approach increases throughput by parallelizing traffic and workloads and it also improves fault tolerance because load is not concentrated on a single machine.

Scale out is commonly implemented with load balancers and autoscaling groups so new instances can be added or removed automatically based on demand. It works best with stateless services or with systems that replicate state so that any instance can handle a portion of the load.

Merging several virtual servers into a single more powerful host to reduce operational overhead is not scale out. That option describes consolidation or moving to a larger host and it reduces the number of machines rather than increasing them.

Refactoring application code to reduce resource usage and speed up execution is a performance optimization and it can reduce cost or improve efficiency. It does not increase capacity by adding hosts and so it is not what scale out means.

Upgrading a single machine by increasing its CPU memory or storage to handle greater demand is not scale out. That option describes scale up or vertical scaling and it focuses on making one machine more powerful instead of adding more machines.

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