GPS works by receiving signals from satellites, which cannot penetrate solid structures or water.
So, it indeed does not work reliably in tunnels or underwater — statements (A) and (B) are correct.
GPS calculates positions in a global reference frame, usually the WGS84 datum, which is a global geodetic datum, not a local one.
Local datums require transformation from the global coordinates.
Also, GPS provides ellipsoidal heights based on the reference ellipsoid.
Therefore, the incorrect statement is option (C) — GPS does not give coordinates in local datum by default.