Learn English – “Reading from” or “reading on”

Your interpretation of the paragraph is correct, and the test is wrong.

I am a native speaker of English. I went through the entire test myself. For two of the questions -- the one you asked about, and the one reading "According to paragraph 2, which of the following is true about the small mammals of the rain forest?" -- it rejects the correct answer. This isn't just a matter of a poorly worded multiple-choice question (unlike the question with the mice and the porcupines). It is so obviously mistaken about the correct answer that I can only think there must have been a data-entry error.

Sadly, this is not an unusual thing with online tests.

As John Lawler says in his comment, you need to know about constituent structure, i.e., parsing. Put a long pause between the two major sub parts of an expression, then short pause between sub sub parts of each of those parts. This will often work pretty well, but it is only a rough guide, and I don't know the details of how it actually does work.

And, also as John says, what you refer to as pauses are not necessarily literally periods of silence. They may instead reflect length or emphasis on a preceding syllable.