Learn French: Il y a peu de sel dans la soupe. - There is little salt in the soup.

Un peu de means 'a little' (a positive amount, meaning there is some), while peu de means 'little' or 'not much' (a negative amount, meaning it is lacking). Here, peu de sel means there isn't much salt in the soup, which fits the translation.

Normally we say du sel for salt. Why is it just de sel here?

Normally, yes! You would say Je veux du sel for 'I want some salt'. However, after expressions of quantity like beaucoup, un peu, and peu, the rule is to just use de (or d') by itself. It never turns into du, de la, or des.

Does il y a mean 'there is' or 'there are'?

It means both! Il y a is a fixed phrase. You use it for singular things, like here with Il y a peu de sel (There is little salt), and also for plural things, like Il y a trois pommes (There are three apples).

Why do we use dans la instead of just dans before soup?

In French, nouns almost always need an article (like le, la, or les) in front of them. Dans just means 'in', so to say 'in the soup', you need both words: dans la soupe.