"What would you like to drink?"
「にします」is a fixed phrase. The に doesn't really behave normally here, just don't confuse it with を and memorize:
「Xをしますか？」- WILL you do X
「Xにしますか？」- Do you DECIDE on X?
「何にしますか？」- What will you decide on?
The first part alone means: 「お飲み物は」- Speaking of drinks
Together: 「お飲み物は、何にしますか？」- Speaking of drinks, what will you decide on?
That is of course, just says "What drink will you decide on?," or simply, "What would you like to drink?"
It's more likely to be used in settings such as when serving a customer. See the following articles:
There still seems to be a ton of sentences where you're marked incorrect just for using Kanji. And that's even with Kanji that Duolingo itself used before... really stupid. You're basically being punished for typing out the answer yourself because word bank is too easy...
August 2019 btw.
I think when this course was released, it was said to be for JLPT N5. And there has not been a word about any change to it since. I've got my N5 years ago, gunning for higher levels since, and Duo can, time and time again, throw sentences and structures at me that I've never seen before. At best it's just weird, at worst it's confusing as hell.