Ujutro je more bilo bistro, pa smo vidjeli ribu blizu stijena.

Together they form the past tense. Croatian past tense is usually made with:

• a present-tense form of biti (je here)
• plus the l-participle (bilo here)

So je bilo = was.

Because more (sea) is a neuter singular noun. Both the participle and the adjective must agree with it:

• bilo = neuter singular
• bistro = neuter singular

If the noun were feminine, the forms would be different.

Pa here means something like so, and so, or then. It connects the second clause to the first and shows a natural result:

• the sea was clear,
• so we saw a fish.

Because Croatian past tense needs the auxiliary biti again.
Here:

• smo = we are/have as an auxiliary form
• vidjeli = past participle of vidjeti

Together, smo vidjeli means we saw.

Vidjeli is the masculine plural past participle. Croatian uses this form when the group is:

• all male, or
• mixed, or
• unspecified in gender

If the speakers were all female, it would be vidjele.

Because it is the direct object of vidjeti (to see), so it goes into the accusative case.

• nominative: riba = fish
• accusative: ribu

So vidjeli ribu = saw a/the fish.

Because blizu normally takes the genitive case.
The noun stijena (rock, cliff) is therefore in the genitive plural here:

• stijena = of rocks / cliffs

So blizu stijena means near the rocks or near the cliffs.

Because vidjeti means to see, while gledati means to look at or to watch.

In this sentence, the idea is that the clear sea allowed them to see the fish, so vidjeti is the right verb.

Because the sentence has two full clauses:

• Ujutro je more bilo bistro
• pa smo vidjeli ribu blizu stijena

In Croatian, when pa connects two clauses like this, a comma is commonly used.