Based on the information provided about trilobites and their fossil distribution, the most reasonable conclusion is:
B. Much of the world was covered with water 500 million years ago.
This conclusion can be drawn because trilobites were marine creatures, and their widespread fossil presence in rock strata across various continents indicates that a significant portion of the earth's surface was likely underwater during their time. The other options do not have sufficient evidence to support them based on the information given.