Those of you who have used the D2L Assignment Grader app on your iPad or Android tablet have been able to directly mark up documents that students submit. D2L has now added that functionality to the website for all faculty. When you go to grade an assignment, the document viewer now has annotation tools. When students go to view the assignment feedback they can see the annotations and download them in PDF format. If you prefer the markup tools in Word, you can still continue to download the student file, annotate it, and then attach it to the feedback.
Below is a slideshow describing the functionality and a video demonstration. Since these were published an eraser tool was added.