It's only that it uses "il faut qu'on" using the generic "we". It can also be interpreted as a generic "you" or a generic "they". It a little more than "it's necessary", but that someone (in this case, most likely "we") are going to have to do it.
Except, of course, that DL rejects the perfectly correct and more precise English translation of “One must type the document”.
Do the French prefer to use "il faut" over "tu dois" etc?
It just seems a bit odd to me to use an impersonal construction for a personal meaning so often.
It's because "tu dois" means specifically "you" (personally). Using "il faut" is impersonal, meaning simply that it will be necessary for someone to do it. Using "on doit" uses what we might call the generic "we", the generic "you", the generic "they". It does not assign the task to you personally, but somebody is going to have to do it.
Why not translate the sentence as it is written: "It is necessary that we type the document."
That statement is best translated as 'Il faut taper le document,' because it makes the sentiment as impersonal as possible. The inclusion of 'on' in 'Il faut qu'on' would typically be interpreted as the informal variant of 'nous', we.
You have changed the sentence from an active verb to a passive one. It is not a reportable "error".