You can type or hand write as well as sketch drawings in OneNote.
With OneNote, you can enter typed and handwritten notes and other information with a keyboard or an inking device such as a mouse, a Tablet PC, or a graphics tablet.
If you use a Tablet PC, handwritten notes can be converted into text (handwriting recognition). If you're using OneNote on a desktop or laptop, you can still use an inking device, or simply, "ink," for writing or drawing, but handwriting recognition is not available. Also, keep in mind that hand writing with a mouse is very difficult and is not recommended.
As with paper, you can write (or type) anywhere on a OneNote page. Just click and write. The inking technology is really great if you'd like to include sketches or diagrams; you can doodle away as you would on paper.