Challenges come in many forms, some of which go through player knowledge, some through character knowledge, and some through the dice.
Most puzzles, codes, ciphers and the like are pure player knowledge - the players either figure out the answer or they don't. Also in the realm of pure player knowledge are most physical and scientific things e.g. geology, weather, etc.; here I assume educated characters e.g. most Wizards will know as much as the real-world player does and thus the player knowledge will do; and less-educated characters can simply ask the brainy one.
Most monster information, magic item properties, etc. and pretty much all exploration are pure character knowledge - just because the player knows you need fire or acid to finish off a troll doesn't mean the character does and I expect it to be roleplayed that way; and just because the player has seen the game-world map (or, as happens sometimes, has played through the current module before) doesn't mean the character knows much of it at all.
Some other things end up as a mix of the two, and that's where the dice come in.
Lanefan