A challenge is just a competition for the sake of it. If you have an old radio, and you really would like to see a robot dancing.. Why not give the radio to someone who can make a dancing robot? Or, if you are a company that would like members to .. something.. then feel free to create a challenge, and give away prizes.
It is very easy to make a challenge. The idea is that with challenges you can inspire people.
There does not have to be a (large) price, and you can take up a challenge even if it is old, or already won by someone else. In general; Although the competition can be harsh, the prizes be real, please do not take this for more than it is; A chance to be game master, and a chance to get inspired or win a competition for fun. :)
If the challenge cannot be resolved for some reason, the prize will go to the participant that was the closest to realizing the challenge.