"Goes" should imply some direction, so it rather cannot be a correct answer in such a short, vague sentence. But "on chodzi do szkoły" could be translated both as "he goes to school" and "he walks to school".
Because it doesn't say 'where'. If he 'is walking' without any specific direction nor destination, just walking around, then "chodzi" is a correct translation.
For others: that's a common construction which means something like "What does he mean?", "What does he have in mind?", "What is he talking about?" and so on.