Learn Hardcore German: Der Laute nervt den Stillen im Wohnzimmer. - The loud one annoys the quiet one in the living room.

Whenever an adjective is used as a noun like this, German writes it with a capital letter, just like any other noun. That’s why you see Laute and Stillen, not laute and stillen.

How do I know who is annoying whom in this sentence?

German shows who does what mainly with cases, not word order.

Der Laute → der = nominative masculine singular → subject
den Stillen → den = accusative masculine singular → direct object

So:

Der Laute (subject) nervt (verb) den Stillen (object).

Even if you changed the word order to:

Den Stillen nervt der Laute im Wohnzimmer.

it would still mean: The loud one annoys the quiet one in the living room, because der (nominative) marks the subject and den (accusative) marks the object.

Are Laute and Stillen singular or plural? The endings -e and -en look plural to me.

Here they are singular, not plural.

They follow the normal adjective endings you’d get with a masculine noun and the definite article:

Nominative singular masculine: der laute Mann → der Laute
Accusative singular masculine: den stillen Mann → den Stillen

So:

Der Laute = the loud man/person (nominative singular)
den Stillen = the quiet man/person (accusative singular)

The -e and -en endings come from case and gender, not from plural.

Why is it den Stillen and not dem Stillen?

Because den Stillen is in the accusative case (direct object), not dative.

Masculine singular with the definite article:

Nominative: der
Accusative: den
Dative: dem

In the sentence:

Der Laute = nominative (subject)
den Stillen = accusative (direct object, the one who is annoyed)
im Wohnzimmer = dative inside a prepositional phrase (in + dem → im)

So you see den Stillen (accusative) and dem hidden in im (dative) in the same sentence, which can be confusing at first.

What exactly does Der Laute stand for? Is a noun like Mann or Mensch missing?

Yes, you can think of a noun as understood but omitted.

Compare:

Der laute Mann nervt den stillen Mann im Wohnzimmer.
Der Laute nervt den Stillen im Wohnzimmer.

The second sentence omits Mann (or Mensch, Typ, Kerl, etc.) because the context makes it clear we’re talking about people. German often does this with adjectives:

der Alte = the old (man/person)
die Kleine = the little (girl)
die Reichen = the rich (people)

Could Der Laute mean “the loud noise” or “the loud sound” here?

No, not in this form.

Der Laute here is masculine and follows adjective declension as a noun.
A “loud sound/noise” as a noun would usually be das laute Geräusch, der laute Lärm, etc.

There is a noun die Laute (feminine) which means the lute (the musical instrument), but:

It is feminine: die Laute, not der Laute.
It doesn’t fit the structure with nervt den Stillen in this sentence.

So here, Der Laute clearly means “the loud person.”

What is the function of im Wohnzimmer in this sentence?

im Wohnzimmer is a prepositional phrase indicating location: in the living room.

in
- dem → im
Wohnzimmer is neuter (das Wohnzimmer).
After in with a static location (no movement into), you use dative: in dem Wohnzimmer → im Wohnzimmer.

Grammatically, it answers the question Wo? (Where?).

Why do we say im instead of in dem?

im is just a contracted form of in dem:

in + dem = im

This happens a lot in German with prepositions and the dative article:

an + dem → am
zu + dem → zum
zu + der → zur

So im Wohnzimmer and in dem Wohnzimmer mean exactly the same; im is just the normal, more natural form.

Is this word order the only possible one, or can I move im Wohnzimmer around?

You can change the word order without changing the basic meaning, as long as the cases stay the same. For example:

Der Laute nervt den Stillen im Wohnzimmer.
Im Wohnzimmer nervt der Laute den Stillen.
Der Laute nervt im Wohnzimmer den Stillen.

All mean essentially: The loud one annoys the quiet one in the living room.
The differences are just in emphasis (e.g. starting with Im Wohnzimmer emphasizes the location), not in who annoys whom.

Why is the verb nervt and not nerven or nerve?

nervt is 3rd person singular, present tense of nerven.

Conjugation (Präsens):

ich nerve
du nervst
er/sie/es nervt
wir nerven
ihr nervt
sie/Sie nerven

The subject is Der Laute → he (or that person), so we need:

er nervt → Der Laute nervt

How are laut and still declined when they are used as nouns like this?

They follow the same endings as normal adjectives with a definite article. Think of an invisible masculine noun like Mann:

Nominative: der laute Mann → der Laute
Accusative: den lauten Mann → den Lauten
Dative: dem lauten Mann → dem Lauten

Same with still:

Nominative: der stille Mann → der Stille
Accusative: den stillen Mann → den Stillen
Dative: dem stillen Mann → dem Stillen

So the endings -e, -en etc. are just the regular adjective endings, only now the adjective is standing alone as a noun.

Is this way of talking (using adjectives as nouns for people) common in German?

Yes, it’s quite common, especially:

in everyday speech for types of people:
- der Alte, die Kleine, die Reichen, die Kranken, die Deutschen
in somewhat playful or slightly literary style for contrasts like in your sentence:
- Der Laute und der Stille, die Fleißigen und die Faulen, etc.

So Der Laute nervt den Stillen sounds completely natural, maybe slightly stylized, but very idiomatic.