The correct answer is option 4 - Forest Act 1878. This act divided the forests of India into three categories - reserved forests, protected forests, and village forests.

Reserved forests are areas that are designated for conservation and protection of wildlife and their habitats. These forests are strictly regulated, and usually require permission for entry and use of forest resources. The main objective of reserved forests is to preserve the biodiversity and prevent any kind of exploitation.

Protected forests, on the other hand, are areas where limited utilization of forest resources is allowed. These forests have some level of protection, but certain activities like cultivation, grazing, and collection of non-timber forest products may be allowed with the permission of the forest department.

Village forests are the forests that are managed and used by local communities for their livelihoods. These forests are important sources of fuelwood, timber, and non-timber forest products for the local people, and they have the right to use and manage these forests sustainably.

The Forest Act 1878 played a significant role in the governance and management of forests in India, and it laid the foundation for the conservation and sustainable use of forest resources.