Toluene reacts with a halogen in the presence of $FeCl_3$, giving a mixture of ortho and para halo compounds. This type of reaction is called

Electrophilic substitution reaction

The correct answer is Option (2) → Electrophilic substitution reaction

Toluene (C₆H₅CH₃) undergoes halogenation (e.g., with Cl₂ or Br₂) in the presence of Lewis acid catalyst like FeCl₃. The FeCl₃ polarizes the halogen molecule to generate an electrophile (e.g., Cl⁺), which attacks the electron-rich aromatic ring. This leads to electrophilic aromatic substitution (EAS), yielding a mixture of ortho- and para-halotoluene (para predominates due to steric reasons).

The methyl group (–CH₃) is ortho-para directing via hyperconjugation and +I effect, activating the ring.

• It is not nucleophilic (aromatic ring acts as nucleophile, not substituent).
• Not free radical (occurs in dark, no light/heat/peroxide initiator; side-chain halogenation is free radical).
• Not addition (aromaticity is restored by loss of H⁺, no addition across bonds).

This is a classic example of electrophilic aromatic substitution.