Major product of mononitration of 3-methylphenol
The product you are suggesting is very unstable as compared to the ones given as answers due to steric factors. Thus it would not be formed.


  Since −OH and −CH3 are o,p-directing groups, shouldn’t the major product be 3-methyl-2-nitrophenol? Why not?


The reasoning that hydroxyl and methyl are o,p directing groups is not at supportive as to why 3-methyl-2-nitrophenol should be formed in preference to the ones given as answers. The o,p directing effect just rules out the meta product and steric factor decides among the remaining possibilities here.