Most commonly gifts are digital, such as drawings or short fic.
Physcial gifts that you mail to the recipient (such as a traditional drawing or painting, or more crafty things like a plush or cross stitch) are also allowed, although not everyone is comfortable giving their mailing address in order to receive physical gifts. They also cost money for materials and shipping, whereas digital gifts mostly just take time to make.
And don’t feel any pressure to send anything physical! It’s really more of just an option in case someone wants to send something. No one is expected or required to do so.