Learn Dutch: Er ligt daar een goede slaapzak. - There is a good sleeping bag lying there.

You are completely right that an unstressed "there" indicating location is usually translated as er. However, Dutch has a strict rule against using er twice in the same clause. Because the sentence already starts with the presentative er ("There is..."), a second er for location is not allowed. To avoid saying Er ligt er..., the locative er is substituted with daar.

Could I just say "Daar ligt een goede slaapzak" instead of starting with "Er"?

Yes, that is perfectly grammatical, but it changes the focus. Starting with Daar ligt... puts a strong emphasis on the location ("Right there lies a good sleeping bag"). Starting with Er ligt daar... is the standard, neutral way to introduce a new, indefinite subject (een goede slaapzak) while also mentioning its location.

Why do we use "ligt" (lies) instead of "is"?

Dutch rarely uses zijn (to be) to describe the physical location of an object. Instead, it strongly prefers posture verbs like staan, liggen, zitten, or hangen. Because a sleeping bag is soft, lacks a fixed upright base, and rests flat on a surface, liggen is the required verb.

Just to double check, why is it "een goede" with an 'e' at the end?