A Challenge is an entity acting in opposition to the PCs in exploration scenarios.
Challenges come in five types: Creature, Environ, Obstacle, Seeker, and Trap. Rules for Challenges and their behavior change drastically depending on their type.
Challenges do not have ranks. Rules for Challenge worth in terms of PCs for scenario design are provided by their type. Challenges never draw cards.
For more information, see DM's Guide Chapter 3: Running Scenarios.