The correct statement explaining the difference between first-person narration and third-person narration is:
In first-person narration, the story is told by a character in the story, and third-person narration uses a point of view from outside the narrative.
This accurately describes that first-person narration involves a character (often the protagonist) sharing their personal experiences and thoughts, while third-person narration is told by an external narrator who may or may not have access to the characters' thoughts and feelings.