This feature seems somewhat spurious. For some files I can activate quick look on a file and have it appear on my iPad to annotate or sign with my Apple Pencil. But for others, the feature does not work.
As an example, I can’t quick look a PDF document in Apple Mail on my iMac and have it pop on my iPad to sign (the markup icon does not appear in quick look), but if I save that attachment to my desktop, then use quicklook to view, the markup icon is present.
My Mac and iPad are both late model and correctly set up for continuity - all other continuity features work one, but this particular option is rather hit and miss.
Best regards to all,