Which demand advanced by the Moderate leadership of the Indian National Congress (1885–1905) most clearly reflected their objective of expanding Indian involvement within colonial decision-making structures?

The correct option is Expansion of legislative councils for Indian representation.

During the early phase of the Indian National Congress (1885–1905), the leadership was dominated by the "Moderates." Their political methods were characterized by constitutional agitation, petitions, and requests for gradual reforms within the framework of British colonial rule.
Rather than demanding immediate independence, their primary goal was to secure a greater share in the administration and governance of their own country.

To achieve this, the Moderates put forward several political demands aimed at reforming the colonial administrative machinery. The most significant among these was the reform and expansion of the legislative councils. They demanded:
1. An increase in the number of Indian members in the Central and Provincial Legislative Councils.
2. The introduction of the principle of election, rather than mere nomination, to make the representation genuine.
3. Enhanced powers for these councils, including the right to discuss the budget and ask questions on administrative matters.

While the Moderates also campaigned for administrative reforms (such as the Indianization of civil services) and economic relief (such as reduction of military expenditure and land revenue), the demand for the expansion and reform of the legislative councils was the most direct and clear reflection of their objective to expand Indian involvement within colonial decision-making structures. This constitutional approach eventually led to legislative concessions, such as the Indian Councils Act of 1892.