Inserting Comments: This feature is especially nice if the teacher does not wish to place any text on the document itself. Thereby leaving the student's work intact while at the same time offering suggestions and coaching in the sidebar.
The text you selected will become highlighted and a box will appear on the right for your to type your comments into.
This new thread of comments will be linked to the highlighted text. If the comment is clicked on the highlighted text will change from yellow to orange.
If using comments for help with revising a paper, when the problem is fixed you or the student may click "Resolve" to make the comment and the highlighting go away.
Don't worry, a history of all comments is saved and can be re-opened here:
Posting a grade: I recommend coming up with a location, like the title or student's name on the document, where you can post a comment to and enter the student's grade for the assignment.
Do you have any other suggestions for grading a Google doc? Please share.