Learn German: Der Koffer liegt unter dem Bett. - The suitcase is lying under the bed.

The preposition unter (under) is a "two-way preposition". Because the suitcase is resting in a fixed location (answering the question "where?"), unter requires the dative case here. In the dative case, the neuter noun das Bett changes to dem Bett.

Which German word for "where" matches this sentence?

You would use Wo (where at) because the sentence describes a stationary location. The question would be "Wo liegt der Koffer?" If someone were actively moving the suitcase to a new location under the bed, you would ask with Wohin (where to).

Could I just say "Der Koffer ist unter dem Bett"?

Yes, that is grammatically correct and perfectly understood. However, German speakers often prefer positional verbs over simply using sein (to be). Because a suitcase is usually resting flat horizontally, they use liegen (to lie) to describe its state.

What is the difference between liegt and legt?

They look similar but have a very important difference! liegt means something is lying somewhere (a fixed state, which triggers the dative case we see here). legt means someone is laying or putting something down (a movement to a new place, which would trigger the accusative case: unter das Bett).