Was it an audio exercise by any chance? For some reason, Duolingo expects nikkud in audio exercises, and marksman a lack of nikkud as a typo, even though it's not a problem anywhere else. It's a fault of the software; I am not a native speaker, but as far as I know, it's normal to simply write יפה and for the difference in pronunciation to be derived from context.
Yes and no. Traditionaly most letters have nikkudot to help with knowing which word is which and pronunciation. Like in the multiple choice it had the generic and femme version of יפה. Thus they put the nikkudot. But more modern lessons have removed nikkudot. I can't say how its done in Israel but my school had an Israeli teacher for 4th grade who removed nikkudot entirely for עברית class while the American teachers insisted on learning All nikkudot to read the חומש. I personally have never been able to read too well with out nikkudot, I always mess something up.