Hi there Lots2Do - this is a great thread! I have and do participate in challenges at the two guilds i belong to. Each guild runs them differently - one has them judged by an outsider person, the other just hangs them and does viewers choice from the members. I have always done an original pattern, original idea, original applique thing. I have totally enjoyed the process of coming up with an idea and the journey of making it come alive.
I have never won anything, but have had great satisfaction in making the quiltlet/wall hanging and enjoy owning it after all is said and done.
I do agree with all the comments so far, that the diversity of entries is . . .well, diverse! Some following the 'rules', some . . . not so much! I do it for myself with no hopes or needs to have to win anything and it works for me.
Fabric=Fun