PPSC says this section focuses on "how a candidate thinks through a situation and prioritizes action, rather than simply testing factual knowledge". Each question describes a situation an officer could face, and asks for the best response.
Several options often look acceptable. You must recognise, in PPSC's words, "the difference between an ideal response and a merely acceptable one". The best answer is usually lawful, fair, proportionate and based on facts: it fixes the immediate problem and deals with the cause, without overreacting or doing nothing.