**Core Concept**
The development of the reproductive system, specifically the differentiation of ovarian and testicular tissue, is a critical aspect of embryology. This process involves the presence of sex chromosomes and the expression of sex-determining genes, which ultimately lead to the formation of either ovaries or testes.

**Why the Correct Answer is Right**
The correct answer is B. 8 weeks because this is the gestational age at which the gonads, which will eventually develop into ovaries or testes, become morphologically distinguishable. The presence of SRY gene on the Y chromosome triggers the development of testes, which then produce anti-Müllerian hormone (AMH) to suppress the development of Müllerian ducts and promote the formation of Wolffian ducts. In contrast, the absence of the SRY gene leads to the development of ovaries. By 8 weeks, the gonads have differentiated into either testes or ovaries, marking a crucial milestone in sexual development.

**Why Each Wrong Option is Incorrect**
**Option A:** 4 weeks is too early for gonadal differentiation, as the sex chromosomes have not yet determined the fate of the gonads.
**Option C:** 12 weeks is too late for gonadal differentiation, as the gonads have already formed and are undergoing further development.
**Option D:** 16 weeks is not relevant to gonadal differentiation, as the gonads have already undergone significant development by this stage.

**Clinical Pearl / High-Yield Fact**
It's essential to remember that sex determination is a complex process involving the interplay of genetic, hormonal, and environmental factors. The presence of the SRY gene on the Y chromosome is a critical factor in testicular development, while the absence of SRY leads to ovarian development.

**✓ Correct Answer: B. 8 weeks**