Wenn ich krank bin, esse ich nur eine kleine Portion Müsli und trinke Tee.

Because wenn introduces a subordinate clause. In German subordinate clauses, the conjugated verb usually goes to the end.

• Main clause: Ich bin krank.
• Subordinate clause: wenn ich krank bin

So Wenn ich krank bin is normal German word order.

When a subordinate clause comes first, the main clause follows with the verb in second position. The whole Wenn ich krank bin clause counts as position 1, so the next thing must be the verb:

• Wenn ich krank bin, esse ich ...

This is called inversion.
Compare:

• Ich esse nur eine kleine Portion Müsli, wenn ich krank bin.
• Wenn ich krank bin, esse ich nur eine kleine Portion Müsli.

Both are correct, but the word order changes.

Here, wenn means when in the sense of whenever or if/when.

• Wenn ich krank bin = When(ever) I am sick

Important differences:

• wenn = when/whenever, for repeated situations or general conditions
• als = when, for a single event in the past
• wann = when? in a question or indirect question

Examples:

• Wenn ich krank bin, trinke ich Tee. = Whenever I’m sick, I drink tea.
• Als ich krank war, trank ich Tee. = When I was sick, I drank tea.
• Wann bist du krank? = When are you sick?

No. That is not correct in standard German.

After wenn, the verb must go to the end:

• Correct: Wenn ich krank bin
• Incorrect: Wenn ich bin krank

English speakers often want to keep English-style word order, but German does not do that in subordinate clauses.

Because the subject is still the same: ich.

German often leaves out the repeated subject in a coordinated structure:

• ... esse ich nur eine kleine Portion Müsli und trinke Tee.

This is like English:

• I eat a small portion of muesli and drink tea.

You can repeat ich, but it usually sounds less natural here:

• ... esse ich nur eine kleine Portion Müsli und ich trinke Tee.

That version is grammatical, but usually unnecessary.

Portion is a feminine noun, and here it is the direct object of esse.

So we get:

• eine Portion
• eine kleine Portion

With an ein-word like eine, the adjective often takes -e in the feminine singular nominative and accusative.

So:

• eine kleine Portion
• eine große Portion
• eine warme Suppe

You do not need to memorize every detail from this one sentence, but it is useful to notice that the article and adjective work together.

Because both are being used in a general substance/food sense, not as single countable items.

• eine kleine Portion Müsli = a small portion of muesli
• trinke Tee = drink tea

This is very common in German with food and drinks.

Compare:

• Ich trinke Tee. = I drink tea.
• Ich trinke einen Tee. = I’m having a tea / a cup of tea.

And:

• Ich esse Müsli. = I eat muesli.
• eine Portion Müsli = a portion of muesli

Nur means only.

Here it comes before eine kleine Portion Müsli, so it limits that part of the sentence:

• esse ich nur eine kleine Portion Müsli = I eat only a small portion of muesli

So the idea is: when I’m sick, I do not eat much.

Word placement matters. If you move nur, the emphasis can change.

German often uses the present tense for habitual or general situations.

So:

• Wenn ich krank bin, esse ich ... und trinke ...

means something like:

• Whenever I’m sick, I eat ... and drink ...

This is not necessarily about right now. It can describe a regular pattern.

English does this too:

• When I’m sick, I drink tea.

In German, all nouns are capitalized.

So:

• Portion = noun
• Müsli = noun
• Tee = noun

But krank is an adjective, so it is not capitalized here:

• ich bin krank

This is one of the most noticeable spelling differences between German and English.

Yes. That is also correct:

• Ich esse nur eine kleine Portion Müsli und trinke Tee, wenn ich krank bin.

Both versions are grammatical:

• Wenn ich krank bin, esse ich nur eine kleine Portion Müsli und trinke Tee.
• Ich esse nur eine kleine Portion Müsli und trinke Tee, wenn ich krank bin.

The difference is mainly focus and style. Starting with Wenn ich krank bin emphasizes the condition first. Putting it at the end sounds a bit more like a normal statement followed by extra information.