"What are you drinking?"
Translation:Что вы пьёте?
In colloquial speech, you can. However, what Duolingo teaches you is closer to formal Russian than to colloquial speech.
You can use either, both should be accepted. (But make sure you also use the correct verb forms.)
1) "е" instead of "ё" is never a typo!; 2) stupid question — all the Russians, including bears, drink either vodka, or tea.
Пьёт is the 3rd-person form, it’s used with the pronouns он ‘he’, она́ ‘she’ and with singular nouns. Using it with ты is ungrammatical (although you would be inderstood, of course).
With ты ‘you’, you should use the 2nd-person singular form: ты пьёшь.
The answer above is what I gave, and it was not accepted. That'd worse than being arbitrary. There's no way to know when they want the familiar or the formal. I used вы bc in the reverse of this question, the familiar was not accepted. So now the formal is not accepted but above in the heading it is.