Learn German: Wer nagt hier an diesem Baum? - Who is gnawing on this tree here?

The word an is a two-way preposition. We use the accusative case when there is directed motion towards a new destination, answering the question 'where to?'. Here, the action of gnawing is happening at a fixed location on the tree, answering 'where?' (wo?). Because there is no change of location, it takes the dative case.

The current lesson is about transitive and intransitive verb pairs that shift between weak and strong conjugations. Does nagen have a strong intransitive form?

No, it does not. While many verbs you are learning right now (like hängen or erschrecken) change from weak to strong when they switch from transitive to intransitive, nagen is always a weak (regular) verb. Its past tense is always nagte and its participle is always genagt.

Could I drop the preposition and just say Wer nagt diesen Baum hier as a direct transitive action?

No, that would sound unnatural. Just like in English where you usually say 'gnawing on a bone' rather than 'gnawing a bone', German heavily prefers the preposition an + dative to express chewing or nibbling at the surface of an object.

Why does the adverb hier come before the prepositional phrase an diesem Baum?