My ebook reader (
REB 1200) allows annotations to be made on the screen via handwritten notes/scribblings or yellow highlighting of letters/words/paragraphs. See image below.
I find my handwriting is horrible on it; and can rarely write anything legible (even to me). The problem I have is that your fist cannot touch the LCD touchscreen while writing on it and that means my handwriting style is "handicapped" and it shows in the final product.
It is great, though, for "marking up" (editing) purposes or underlining/highlighting purposes.
Given it's limitations, I still appreciate that my reader HAS that capaibility, though.