Moodle assignments are a good way to keep track of student submitted files. It is also possible to mark up student files and upload the marked files to Moodle in order to provide feedback to students.
There are two ways to do the process - one at a time or in bulk.
In order to upload a feedback file, you must have the Feedback file option turned on in the settings for the assignment
Click on the assignment in your Moodle course and View All Submissions. Click on the "Grade" button for the student work you wish to grade. Download the file submission. Mark up the file and upload the file to the "Feedback Files" area. Make sure to save changes before leaving the page.
The fastest way to download and mark up assignments is by using the bulk options.