Challenge is Olberic's Path Action in Octopath Traveler, and one of two that can be used in the first demo of the game. The ability allows Olberic to duel certain non-playable characters in the game in one-to-one combat. This Path Action is the noble counterpart to H'aanit's Path Action, Provoke.
When the player Challenges townsfolk to a duel, they will enter combat between Olberic and the single enemy - other members of the party will be excluded from the fight. These battles are unique in the fact that Olberic can rarely die in these battles; rather, he will be left at 1HP and can walk away freely. This Path Action is useful as Challenging can remove people that may be blocking a pathway, can be used to solve many side quests that are available in the demo (i.e stopping troublemakers), or can simply be used to extra earn money or experience. However, if you defeat someone with Challenge, you can not use any other Path Actions on them until you leave and come back to the area.