"Who is in the bathroom?"
Why is the last character (里) needed? Isn't the second one (在, the verb meaning "is in") enough? In earlier lessons, just 在 was used very often, without 里!
I think there's no difference in the meaning, the same as "I'm in the bathroom" and "I'm inside the bathroom"! However, sometimes you do need to specify "inside" and duolingo is probably just trying to use a simple example to illustrate how to use 里 after a place-word, the same fashion as you use 上 or 下!