I am not a native speaker, but as far as I know, this is how they are roughly used:
If both "ma" and "i" mark a location in a sentence, "i" is used for the more precise location, e.g., "aia au i Honololu ma Hawai'i".
Otherwise, if there is only one location, you'd use "ma" when describing a stationary situation, such as in the Duolingo sentence, and you'd use "i" for the description of a non-stationery situation, such as "Pā'ani ke keiki i ke lumi moe" ("The child plays in the bedroom.")
I'd appreciate any corrections and additions someone more knowledgable might have!
I learned from my first kumu 'ōlelo that "ma" is more appropriate, as you mentioned, for stationary situations, as "on, at, in," and "i" is for the more active directional "to, toward, or at (as in running at, as opposed to living at." Examples she typically used are: "Hula au ma Waikiki" meaning "I dance in Waikiki" Vs. "Hula au i Waikiki" meaning "I dance to Waikiki" with the implication that I started the dance in Kaimuki or Kahala - a very long kaholo indeed! Having used DL for a month or so, I'm getting a different mindset, and have transitioned through "they're interchangeable" to "they have different uses, but those are different from the ones I learned from kumu ekahi.