Learn German: Wohin reisen Sie? - Where are you traveling to?

Wo asks about a fixed location ("where"), while wohin asks about a destination or direction of movement ("where to"). Because traveling (reisen) involves moving toward a destination, you must use wohin.

How do I know if Sie means "you" or "they" in this sentence?

Both the formal "you" and "they" use the exact same verb form: reisen. However, the formal "you" is always capitalized as Sie. Because it is capitalized here even though it isn't the first word of the sentence, we know it means "Where are you traveling to?". If it were a lowercase sie, the sentence would mean "Where are they traveling to?".

How would I ask this same question to a close friend?

You would use the informal "you" (du) instead of the formal Sie. The verb must change to match, so the question becomes Wohin reist du?.

Why is the verb reisen placed before the subject Sie?

In German open questions, the question word (like wohin) comes first, and the verb is always in the second position. The subject (the person doing the action, which is Sie here) comes immediately after the verb.