Hi there, Robert Halper Welcome to the Community!
Here are the two guides that explain the differences:
How do I upload a file as an assignment submission in Canvas?
How do I submit an online assignment?
Typically, we used online assignment when using a plagiarism detector or when giving the student the option to upload via GoogleDocs, Dropbox of O365. File assignment generally just meaning uploading a .doc, .docx or pdf form.
Hope these help!
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