A writing challenge is a contest between two writers. You can create a challenge and another writer can accept the challenge. When accepted, a private contest begins between you and the author that accepted. So, for example, you can create a poetry challenge. When you create your challenge your identity will not be revealed. The person that accepts the challenge won't know who you are until after the challenge is accepted.
At that point you will both take part in a private contest. Both you and the person that accepts your challenge will write a poem. The winner receives the member dollar prize pool. Your "win/loss" record (shown in your profile) is updated based on whether you win or lose the challenge. The winner of challenges are determined by the Contest Committee. Click here to create a challenge or for more information.