Learn French: Il raconte une histoire et nous la croyons.

Croire is an irregular verb. For the plural forms nous and vous, the stem changes to include a 'y' instead of an 'i'. So it becomes nous croyons (we believe) and vous croyez (you believe). However, for the ils/elles form, it goes back to an 'i': ils croient.

What does the word la mean in this sentence? Isn't it just the word for "the"?

In this sentence, la is a direct object pronoun meaning "it". It replaces the feminine noun une histoire (a story) so we don't have to repeat the word. While la means "the" when placed in front of a noun, it means "her" or "it" when placed in front of a verb.

Why is la placed before croyons instead of after it?

In French, object pronouns like la (it) must go directly in front of the verb they belong to. Unlike English where we say "we believe it", the French sentence structure literally translates to "we it believe" (nous la croyons).

Could I use il dit (he tells) instead of il raconte here?