In the grasslands, trees do not replace the grasses as a part of an ecological succession primarily due to water limits and fire. The grasslands typically have limited water availability, which makes it difficult for trees to establish and grow. Additionally, grasslands are prone to frequent wildfires, which further hinder the growth and survival of trees.

Option 1 suggests that limited sunlight and nutrients may be the reasons for the absence of trees in grasslands. While these factors may play a role, they are not the primary reasons.

Option 3 suggests that insects and fungi may prevent the growth of trees in grasslands. While insects and fungi can impact the health of trees, they are not the main factor preventing tree establishment in grasslands.

Option 2 states that none of the options are correct, which is incorrect.

Therefore, the correct answer is option 4.