Learn Finnish: Huone on varattu. - The room is booked.

on varattu describes a resultative state—it tells us the condition the room is in right now (it is currently booked). If you used the past passive varattiin, you would be focusing on the action that happened in the past (the room was booked by someone).

Where does the word varattu come from?

It comes from the verb varata (to book or reserve). varattu is the passive past participle. For verb type 4 words like varata, you create this form by taking the stem and adding -ttu. In this sentence, it functions like an adjective describing the room.

How do I make this sentence negative ("The room is not booked")?

You only need to change the verb on into its negative form. The sentence becomes Huone ei ole varattu. The participle varattu stays exactly the same.

If I want to say "The rooms are booked", does varattu change?

Yes. Because varattu is acting as a describing word for the subject, it has to match if the subject is plural. In standard Finnish, "The rooms are booked" is Huoneet ovat varattuja, where the participle takes the partitive plural ending -ja.