Challenges
From Future Skill
In a Challenge, a competitor can create a solution for a specific problem that will then be evaluated and added to a highscore ladder where cummunity members can compete against each other for the top position. Submitting a solution and achieving impressive highscores are rewarded with achievements and experience points.
When a solution to a challenge is evaluated it will run against some hidden levels. These hidden levels typically run against a larger data set compared to the public levels that the competitor got to test their code against whilst writing their solution.
Tournaments
In a standard challenge you are only competing against a static oponent. However there is a special version of challanges called tournamnets where you can compete against your friends and other developers from around the world.
Read more about Tournaments here: tournaments