In AWS CloudFormation, the PrivateDnsName property of an EC2 instance cannot be directly set within the template. This property is automatically assigned by AWS when the instance is launched within a VPC and is associated with the private IP address of the instance. The attempt to explicitly set PrivateDnsName in a CloudFormation template will result in an error, causing the stack creation to fail. Therefore, option C is correct. For reference, the AWS documentation on EC2 instances in CloudFormation does not list PrivateDnsName as a configurable property AWS CloudFormation User Guide.
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