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In Continuous Deployment, the 'Monitor' activity is fundamentally about overseeing the performance and behavior of applications in the production environment after they have been deployed. It involves tracking various metrics and logs to ensure that the application runs smoothly and meets user expectations. By focusing on reporting issues that arise in production, teams can quickly identify and react to problems, thereby maintaining the quality and reliability of the software.

This monitoring is crucial because it informs the development and operations teams not only about the successful deployment of features but also about any functional or performance issues that may impact users. By gathering real-time feedback and making this data available, organizations can initiate quick resolutions and continuously improve their deployment processes.

While ensuring changes function as expected is part of the monitoring and quality assurance process, it generally is a preliminary step that takes place before full production deployment. Producing deployable binaries pertains to the build process rather than the monitoring of the application post-deployment. Hosting solutions in a staging environment relates to testing and validation prior to deployment, rather than the ongoing assessment of an application once it is live. Thus, the core of the monitoring activity in Continuous Deployment is accurately reflected in the option that emphasizes reporting on issues arising in production.