Xbox One challenges are time-limited tasks displayed alongside achievements in a player's profile. Unlike achievements, challenges do not award GamerScore. Challenges, however, have the ability to track progress across multiple games and among all Xbox Live members, allowing developers to implement community-based goals. The Xbox 360 currently offers a similar service with Avatar FameStar.
McDonald outlines a possible implementation: "Imagine, for example, a game releases a headshot weekend challenge that requires players to cumulatively headshot 1 million baddies in a 3 day period. And every person who participates and meets the challenge's goals gets the unlock on his or her achievement history and reaps its reward."
Achievements, meanwhile, are not bound by time constraints, and are still unlocked via individual player progress. Promising players "more tangible benefits" for their in-game progress, McDonald notes that Xbox One achievements may now unlock "digital artwork, new maps, unlockable characters, and temporary stat boosts," along with other bonuses.
McDonald revealed that Xbox One video and music apps can also use achievements to reward players with "sneak peek content, early access, or subscription extensions." Note, however, that you can't use app achievements to pad out your Gamerscore – points are only awarded for achievements earned in games.