Challenges are mini-games that will help you earn Gears which you can use to unlock new and beneficial mods for your fight to free the island. Each challenge has a score tier which will award you with the corresponding number of gears after reaching the particular time or score. You can earn 1 gear for the minimum target and 5 gears for surpassing/reaching the required high score. Some of the challenges can be easier done once you unlocked additional mods (like Nitrous for racing) so don't fret if you haven't reached the 5-gear threshold on your first few attempts. All challenges are repeatable so you can clear them at your own pace.