(C) Assertion (A) is true, but Reason (R) is false.
The passage clearly states that the most powerful weapon of the Spanish conquerors was not a conventional military weapon, but germs such as smallpox.
The textbook explicitly says: "the most powerful weapon of the Spanish conquerors was not a conventional military weapon at all. It was the germs such as those of smallpox." So Assertion (A) is correct (colonisation was underway by mid-sixteenth century), but Reason (R) is false because it wrongly credits conventional weapons. Option (C) is correct.