Blood vessels are composed of different layers, including the tunica intima, tunica media, and tunica adventitia. The innermost layer, the tunica intima, is made up of cells called endothelial cells, which are a type of squamous epithelium.

Squamous epithelial cells are flat and thin, resembling scales or tiles. They are tightly packed together, forming a smooth and continuous layer that lines the blood vessels. This layer is important for maintaining the integrity and functionality of the blood vessels.

The endothelial cells lining the blood vessels play several crucial roles:

1. Barrier Function: The endothelial cells form a barrier between the blood and the surrounding tissues, preventing the leakage of blood components and maintaining the fluid balance within the blood vessels.

2. Selective Permeability: The endothelial cells regulate the movement of substances into and out of the blood vessels. They selectively allow the passage of nutrients, oxygen, and waste products, while restricting the entry of harmful substances and pathogens.

3. Blood Flow Regulation: The endothelial cells produce and release various vasoactive substances, such as nitric oxide, prostaglandins, and endothelin, which regulate blood vessel dilation and constriction. This helps in maintaining proper blood flow and blood pressure.

4. Clotting and Anticoagulation: The endothelial cells release substances that prevent blood clotting under normal conditions. However, in response to injury or inflammation, they can also promote blood clot formation to prevent excessive bleeding.

5. Inflammation and Immune Response: The endothelial cells participate in the immune response by interacting with immune cells and releasing inflammatory mediators. They play a crucial role in recruiting immune cells to sites of infection or injury.

In conclusion, the correct answer is option D, squamous epithelium. The endothelial cells lining the blood vessels are a type of squamous epithelium that forms a continuous layer, providing important functions such as barrier function, selective permeability, blood flow regulation, clotting and anticoagulation, and participation in inflammation and immune response.