It displays content that is hosted on the Internet somewhere, such as a Google Map, a video, a poll, a quiz, and so on.
Displaying content from the Internet can also be done with other types of components (such as the Social Media and Embed components), but the content of those components is static while Interactive components can be customized by the user.
Example: A basic Google Map can be offered as a component which the user can further modify from within the Digital editor by adding locations to the map.
Interactive components need to be defined and made available in Studio. This article explains how to do this.
For information about how to work with an Interactive component once it is added to an article, see The components of a Digital article.