The built-in grading interface in the Assignment Activity gives instructors the ability to view and directly annotate student assignment submissions online (in the same window as the grading interface) without having to download and re-upload the files.
Once you are ready to grade the submissions, enter the assignment and click the Grade button to enter the assignment grading interface. 
When you have entered the grading interface, click the middle button at the bottom left of the screen to view the PDF editor/grade panel split screen view.
When you enter the split screen view, you will see the student's PDF submission on the left, with a row of icons across the top to navigate and make annotations. Use the arrows on the top left to navigate from page to page. To make annotations, use the icons on the right, including comments, highlighting, various drawing/shapes tools, and stamps.
There are four available stamps:
If you need to delete a mark, click the Select (Arrow) icon, then click the mark and you will have the option to delete it.
Here is an example of what an annotated document might look like:
To save and make the annotations available to a student, just click Save changes at the bottom of the screen.