Learn German: Ja, er ist sehr gut. - Yes, it is very good.

In German, pronouns must match the grammatical gender of the noun they replace. If this sentence is talking about a masculine object like der Apfel (the apple) or der Tisch (the table), you have to use the masculine pronoun er, even though in English we just call objects "it".

How does the word order work after Ja?

Words like Ja (yes) and Nein (no) do not count as the first position in a sentence. They sit completely outside the main clause. After the comma, the counting starts over, so the subject er is in position 1 and the verb ist takes its normal spot in position 2.

If this is the answer, what would the Yes/No question look like?

To ask "Is it very good?", you move the verb to the very front of the sentence. This is called Verb-first (V1) word order. The question would simply be: Ist er sehr gut?

Can I leave out er and just say Ja, ist sehr gut?

No, you generally cannot drop the subject in German. Unlike languages such as Spanish or Italian, German requires you to explicitly state who or what is doing the action, so the er must be included.