Challenges is a fun way to make your gameplay a bit more different and sometimes even harder.
Challenges, as well as Playstyles, are not regulated by the game in any way and are not a standalone mechanic. All challenges, by the time of publishing, are purely community-driven.
After some time of playing the game and understanding all the mechanics behind it, the game might become a bit repetitive. Challenges is a great way to solve this issue: rankers can set certain goals to achieve during the round or make their gameplay restricted in any possible way to increase the difficulty.
To highlight the challenge round, rankers usually tweak their name in a way that it would still be recognisable but will somehow point at the challenge.