A server failed Thursday evening before the nightly backup. The backup scheme in place was full backups every Sunday, incremental backups on Monday, Wednesday, and Friday, and differential backups…

One backup set is insufficient because no single backup contains all data from Sunday through Wednesday.

Two sets are not enough - Sunday's full plus Wednesday's incremental would miss all changes between Sunday and Tuesday, because Wednesday's incremental only captured changes since Tuesday's differential.

The server failed before Thursday's differential ran, so the last successful backup was Wednesday's incremental. To restore, you need: (1) Sunday's full backup as the baseline, (2) Tuesday's differential which captures all changes since Sunday through Tuesday, and (3) Wednesday's incremental which captures only the changes since Tuesday's differential. Skipping Monday's incremental is possible because Tuesday's differential already contains all changes since the last full backup, making three sets the minimum required.

Four sets would include Sunday full, Monday incremental, Tuesday differential, and Wednesday incremental, but Tuesday's differential makes Monday's incremental redundant, so four is not the minimum.