Questions & Answers about Sie fährt in die Stadt.
Why does fahren become fährt with an umlaut here?
The verb fahren (to drive) is a "strong" verb. In the present tense, many strong verbs with an a in the stem change it to an ä for the du (you) and er/sie/es (he/she/it) forms. Since our subject is sie (she), the stem vowel gets an umlaut and becomes fährt.
How can we tell that Sie means "she" here, rather than "they" or formal "You"?
The verb ending gives it away. If Sie meant "they" or the formal "You", the verb would be Sie fahren. Because the verb is fährt (using the -t ending for he/she/it), we know it must mean "she".
If in means "in", why is the translation "into the city"?
In German, the preposition in can mean both "in" (a fixed location) and "into" (movement toward a destination). Because she is actively driving to a destination, in translates to "into". It uses the accusative case here, and since Stadt is a feminine noun, we use die.
Why is the translation "is driving" when German doesn't have an "-ing" verb form?
German only has one present tense! Sie fährt can mean "She drives", "She is driving", or even "She does drive". You just pick the one that makes the most sense in English for the situation.