When fats and oils are oxidised, their smell and taste changes, this process is termed as:

Rancidity

The correct answer is option 3. Rancidity.

When fats and oils undergo oxidation, leading to changes in their smell and taste, this process is termed as rancidity. Rancidity is a chemical process that occurs when fats and oils are exposed to oxygen in the air, leading to the breakdown of their chemical structure. This process can result in the formation of unpleasant odors and flavors, as well as the degradation of nutritional value in the affected fats and oils. So, the correct answer is Rancidity.