It is an important part of a student's learning experience that they receive an appropriate level of feedback for any work that they submit. Assignments provide a range of options for you to do this:
Feedback options are set up when you create an assignment.
Feedback comments enables a column in the Grading sheet for you to type in comments. If using the Grading sheet an input box is supplied where you can format the text.
Feedback files, as the help explains, lets you upload files with feedback (which could even be audio or video feedback).
Offline Grading worksheet if ticked does not have to be used. However, it optionally allows you to download a CSV (Excel) worksheet that contains details of all students, their submission status (No submission, Submitted for grading, Graded), the Grade if awarded, Date/time stamps for submission and grade and Feedback comments. You can then use this to grade off-line and upload to update the results and feedback when finished grading.
To download the "offline grading worksheet" you need to be viewing the Grading screen and select the appropriate Grading action at the top of screen, as shown below. As soon as selected you will be prompted to open or save a CSV file called Grades-<coursename>-<assignment name>-<date>.csv
See below for an example of the grading sheet, which makes it easy for you to provide written feedback comments, upload feedback files, and optionally notify the student when you have completed grading.
This has been displayed by picking on the Grade column 'pencil' icon next to the students name, in the Grading screen.