New information on the Assist and Challenge diffcult settings. It seems it's only activated by a key you get when you finish the game. However, you only get one key depending on your version. If you have Black 2, you get the Challenge key. The Challenge key makes the A.I smarter, increases the level of some battles (I've read some conflicting reports though on this part, some saying it doesn't increase the levels), and gives Gym Leaders/E4/Champion/Major battles more Pokemon. Normally, Gym Leaders consist of 2-3 Pokemon, where in Challenge Mode I think they'll have a full on 4-6 (depending on where they are stationed.) The Assist Key, which you get in only White 2, lowers the levels of all trainers and I think Gym Leaders. You can share these between another version at any point in the game. If you start a new game after you finsih, then you lose the key.
Note: This isn't really confirmed and there are some reports saying they conflict the level increasing or Pokemon increase. So this is just a rumor for now. All from Neogaf and some from Serebii.