Workspace-specific deployment settings should be defined under each environment in the targets section of databricks.yml. A bundle target represents a deployment environment such as development, staging, or production. Each target can contain its own workspace mapping, including the workspace host and an optional root_path. This structure allows one bundle codebase to be deployed predictably to different environments without embedding infrastructure details in notebooks or pipeline source code. A README file is documentation and is not interpreted as bundle configuration. Hardcoding workspace details in Python couples transformation logic to a particular environment. Global local environment variables are machine-specific and do not provide a complete, version-controlled bundle definition. Therefore, option C correctly places the workspace-specific settings in the declarative configuration used during validation and deployment.