The correct option is C on
Option A - 'In' is used to explain 'inside something or someplace.' As there can be nothing inside the hills, we can't use 'in' here. Thus option A is incorrect.
Option B - 'At' is usually used for a specific location. For example, 'I am at the top of the world.' As 'the hills' is not specific, we can't use 'at' here. Thus option B is incorrect.
Option D - 'With' is used to explain 'involvement' or 'accompanied by'. As both of the meanings do not fit in the second sentence, we can't use 'with' here. Thus option D is incorrect.
Option C - 'On' is used to explain 'above' or 'something that covers the surface'. As the holy places are located above the hills, we can use 'on' here. Thus option C is the correct answer.
'Most of our holy places, whether on the hills...'