Der Rückgabeautomat steht draußen.

Because Rückgabeautomat is the subject of the sentence, so it is in the nominative case.

Also, the noun is masculine:

• der Automat = the machine
• so der Rückgabeautomat = the return machine

A useful rule for German compounds: the last part decides the gender. Since Automat is masculine, Rückgabeautomat is masculine too.

It is a compound noun, which is very common in German.

It breaks down like this:

• Rückgabe = return, handing something back
• Automat = machine, automated machine

So Rückgabeautomat literally means something like return machine.

German usually writes these compounds as one word, even when they look long to an English speaker.

German often uses special location verbs instead of just to be.

• stehen = to stand
• liegen = to lie
• sitzen = to sit

For objects like machines, cabinets, bottles, and many other things that are thought of as upright, German often uses stehen.

So:

• Der Rückgabeautomat steht draußen. = The return machine is standing outside / is outside.

You can say Der Rückgabeautomat ist draußen, and it is grammatically fine, but steht sounds more natural when talking about where a machine is physically located.

draußen is an adverb meaning:

• outside
• outdoors

In this sentence, it tells you where the machine is.

It is not a noun and it does not take an article.

Useful comparison:

• draußen = outside, outdoors
• nach draußen = to the outside, outwards, outsideward movement
• außen = on the outside of something

So here, draußen means the machine is located outside.

Because this is a normal German main clause, and German main clauses usually put the finite verb in second position.

The structure here is:

• Der Rückgabeautomat = subject
• steht = finite verb
• draußen = adverb of place

So the order is perfectly normal:

• Der Rückgabeautomat steht draußen.

You can also change the emphasis:

• Draußen steht der Rückgabeautomat.

That version emphasizes outside more strongly, but the verb still stays in second position.

Yes. It is grammatical and understandable.

But there is a small difference in feel:

• steht draußen sounds more physical and idiomatic for an upright object
• ist draußen is more general and less specific

So a native speaker would often prefer steht draußen for a machine.

Yes, it is understandable and correct, but how natural it sounds depends on the context.

For example, if you mean a machine where you return deposit bottles in a supermarket, native speakers very often say:

• Pfandautomat

So:

• Rückgabeautomat = general return machine
• Pfandautomat = specifically a deposit return machine

Your sentence is still perfectly good German.

Because in German, all nouns are capitalized.

So:

• der Rückgabeautomat → noun, capitalized
• draußen → adverb, not capitalized

This is one of the most noticeable spelling rules in German.

A rough English-friendly guide:

• Rückgabeautomat ≈ RUECK-gah-buh-ow-toh-maht
• draußen ≈ DROW-sen

A few pronunciation points:

• ü in Rück- does not exist in standard English; it is a front rounded vowel. English speakers often need practice with it.
• au sounds like the ow in cow
• ß is pronounced like s

So:

• draußen has an s sound, not a z sound.

The plural is:

• die Rückgabeautomaten

Examples:

• Der Rückgabeautomat steht draußen. = singular
• Die Rückgabeautomaten stehen draußen. = plural

Notice that the verb changes too:

• steht for singular
• stehen for plural