The answer is correct because 'going' in the phrase 'They talked about going on a vacation' functions as a gerund. A gerund is the '-ing' form of a verb that acts as a noun. In this case, 'going' refers to the act of going on a vacation, which is what they are talking about.

To clarify:    

• Participle: Used as an adjective or to form verb tenses.  
• Infinitive: The base form of a verb, often preceded by 'to' (e.g., to go).  
• Verbal Noun: Similar to a gerund, but typically used in different grammatical roles. However, 'gerund' is the more precise term in this context.

Therefore, in this sentence, 'going' serves as a noun describing the activity of the vacation, which confirms it as a gerund.