There are different types of assignments
Offline activity - this is useful when the assignment is performed outside of Moodle. Students can see a description of the assignment, but can't upload files or anything. Teachers can grade all students though, and students will see notifications of their grades.
Upload a single file - this type of assignment allows all students to upload a single file, of any type. This might be a Word processor document, or an image, a zipped web site, or anything you ask them to submit. Teachers can grade submitted assignments online.