The difference between the present progressive and the present tense is mostly how commonly it is used in each language. In English we use the present progressive extensively for active verbs as the present tense. What are you doing? I am cooking, walking, talking, etc) In Spanish this is mostly qué haces? Cocino, camino, hablo, etc) When they use the progressive it has a "I am right in the middle of" quality about it. So many of the sentences that Duo has in the present would be best expressed in the progressive in English, but Duo wants you to demonstrate that you notice the construction. Of course they all have meanings that are expressed in English with the present, but the meanings are a little different.
You are not a very knowledgeable brother of religion and old literature apparently. What ART thou cooking would be the correct conjugation. I doubt that Duo will accept it anyway, but I tend to eschew pointing out other people's errors by flaunting my own. I used to use thou forms on Google translate because they sometimes prefer usted forms in the translation and sometimes even mix them up in one sentence.
No. Estás is the Tú form of the verb Estar. It means you are or are you (no pronoun to reverse) The Spanish progressive tense is only used to emphasize the ongoing nature and is less likely to be used. Beyond that, what talking about the food itself being cooked you use cocinarse. So Qué se cocina is the most likely or Qué se está cocinando