@Kim-Rosenlof I second what @Mia-Clarke said about it being really open. I personally am trying to make up a folktale inspired story based on the prompts. So essentially a story that is told in 7 images, which is proving to be quite the challenge, but good one nonetheless.
Another person who does the challenge in this way is Cynthia Cliff. I recommend checking out her past prompt based projects, in which she tells a story.
Also I find the creators of the challenge chose the word for each day wisely (you can tell they put thought into which word falls on what day) and if you do a little research as to the significance of each word as it relates to folklore tradition, it can be a really good jumping off point for storytelling.
Hope this helps to get a better idea of the challenge (I too was a little confused about it's open-endedness at first).