I think that "nepoj" should be accepted. Nowadays, the "ge"-prefix is typically only used when it is essential for the conversation.
Not with family words, as they are gendered.
I see, I'll remember that.
How about other words? I am used to say "amikoj" instead of "geamikoj", even if they include women. Is that accepted?
Yes, most will agree that amiko is not gendered.
In the variant of Esperanto named Iĉismo, it would indeed be correct. It is not yet widely accepted, though. I guess that Duolingo wants to stick to the traditional Esperanto, which is understandable.
Anyway, we are not told whether these grandchildren were all boys, all girls, or a mixture!