**Core Concept**
Knudson's hypothesis is a mathematical model that explains the relationship between the number of mutations required for the development of cancer and the likelihood of tumor formation. This hypothesis is based on the concept of multi-step carcinogenesis, where cancer arises from a series of genetic alterations in somatic cells. The model proposes that cancer can arise from two or more mutations in a single cell, which can occur simultaneously or sequentially.

**Why the Correct Answer is Right**
Knudson's hypothesis is specifically applied to retinoblastoma, a rare form of eye cancer that affects children. The hypothesis states that two mutations in the RB1 gene, which is a tumor suppressor gene, are required for the development of retinoblastoma. The first mutation inactivates the RB1 gene, allowing the cell to grow and divide uncontrollably. The second mutation inactivates the remaining functional allele of the RB1 gene, leading to the loss of tumor suppression and the formation of a malignant tumor. This hypothesis has been widely accepted and has been applied to other forms of cancer, including breast cancer and lung cancer.

**Why Each Wrong Option is Incorrect**
**Option A:** This option is incorrect because Knudson's hypothesis is not applied to neuroblastoma, a different type of cancer that affects the nervous system. While neuroblastoma also involves genetic mutations, it is not the specific cancer that Knudson's hypothesis was developed to explain.
**Option B:** This option is incorrect because Knudson's hypothesis is not applied to familial adenomatous polyposis (FAP), a genetic disorder that increases the risk of colorectal cancer. While FAP does involve genetic mutations, it is a different type of cancer syndrome that is not directly related to Knudson's hypothesis.
**Option C:** This option is incorrect because Knudson's hypothesis is not applied to Li-Fraumeni syndrome, a rare genetic disorder that increases the risk of several types of cancer. While Li-Fraumeni syndrome does involve genetic mutations, it is a different type of cancer syndrome that is not directly related to Knudson's hypothesis.

**Clinical Pearl / High-Yield Fact**
It's essential to remember that Knudson's hypothesis is a fundamental concept in cancer biology, and understanding the relationship between genetic mutations and cancer development is crucial for diagnosing and managing various types of cancer.

**Correct Answer: D. Retinoblastoma**