"학교에서 같이 놀아요."
Translation:Let's hang out at the school together.
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Better remember it as a general location marker. At/in, depending on the context, both can be accepted.
If English accepts both equivalently, you should probably report it. They might just have forgotten some alternative answers.
However, if it the location is more specific, e.g. "the cat is in the box" as in "inside the box", you would have to use additional location information, e.g.상자 안에.
From what I understand, 에서 is used to indicate a place where an action is made, and 에 indicates an object is somewhere, as well as to indicate the time when something happens. There are exceptions though, like 가 (to go). With that verb you need to use 에 to say "go to" and 에서 to say "go from"