"Do you need milk?"
From what i understand it isn't but it wants yoiu to know that you don't always havr to use tú becausr of verb conjugation.
AS FAR AS I KNOW, and downvote me if I'm wrong, but, from what I learned...
It would be asking, "you need milk?" In English, this is sort of slang, and the proper term would be "do you need milk," or "need milk," hence why Duolingo says the correct answer is "Necesitas leche," which, word-for-word is "need milk."
Formal is usted if you were ralking to an elder or stranger. Tú is for eveyone else and is less formal.
Duo usually accepts any form of "you" unless some form of address is used. If a first name is used it's usually informal (tú); if señor, señora, etc, are used it's definitely formal (usted or ustedes).
I just used Usted necesita leche and it was accepted. I assumed the answer would use the tú form but just wanted to be contrary.