There are working examples in eAssessment with Moodle on our OpenLearn site.
The documentation is in How to create questions in Moodle on that site.
This question type allows students to complete a paragraph of text by selecting the missing words using drop-down menus. You can make questions like this using the Cloze question type, but this question type is easier for teachers to get up, and presents the feedback in a more accessible way.
The question type was created by Jamie Pratt for the Open University.