Wir arbeiten daran, aber es ist nicht leicht.

Here daran means on it in the sense of working on it.

So Wir arbeiten daran means We are working on it or We’re working on that.

It usually refers to a task, problem, plan, or goal, not a person.

Because the verb arbeiten can be used with the preposition an to mean to work on something.

• arbeiten = to work
• an etwas arbeiten = to work on something

So:

• Wir arbeiten daran = We are working on it

Without an, arbeiten just means to work in a more general sense:

• Wir arbeiten. = We are working.

Daran is a da-compound:

• da-
  • an → daran

German often uses these da- compounds when referring to things, ideas, situations, or actions after a preposition.

Examples:

• denken an etwas → daran denken
• arbeiten an etwas → daran arbeiten
• interessiert an etwas → daran interessiert

The r appears because the preposition begins with a vowel: an.

German normally does not say an es in this kind of structure.

When a preposition refers to a thing rather than a person, German usually prefers a da-compound:

• an etwas → daran
• auf etwas → darauf
• mit etwas → damit

So Wir arbeiten daran sounds natural, while Wir arbeiten an es is not correct standard German.

Because an ihm / an ihr would usually refer to a person or sometimes a grammatical noun with natural-gender reference.

German typically uses:

• da-compounds for things/ideas
• preposition + pronoun for people

So:

• Wir arbeiten daran. = We’re working on it. → a project, issue, idea, etc.
• Wir arbeiten an ihm. could mean something like working on him, for example medically, artistically, or metaphorically improving him.

In your sentence, the meaning is clearly about a task or situation, so daran is the natural choice.

Because aber is a coordinating conjunction meaning but, and in German it is normally preceded by a comma when it connects two main clauses.

Here you have two full clauses:

• Wir arbeiten daran
• es ist nicht leicht

So they are joined as:

• Wir arbeiten daran, aber es ist nicht leicht.

This is very standard punctuation in German.

Because aber is a coordinating conjunction, not a subordinating one.

That means it does not change the normal main-clause word order. In a main clause, the conjugated verb stays in the second position:

• Es ist nicht leicht.

After aber, that stays the same:

• ..., aber es ist nicht leicht.

Compare with a subordinating conjunction like weil:

• ..., weil es nicht leicht ist.

With weil, the verb goes to the end. With aber, it does not.

Because kein is used to negate nouns, while nicht is used to negate adjectives, verbs, and whole clauses.

Here leicht is an adjective, so you need nicht:

• Es ist nicht leicht. = It is not easy.

Compare:

• Das ist kein Problem. = That is no problem.
  (Problem is a noun.)
• Das ist nicht leicht. = That is not easy.
  (leicht is an adjective.)

Es refers to the situation or task being talked about — essentially it in it is not easy.

In English and German, it / es can refer to something already understood from context, even if it is not repeated directly.

So in this sentence:

• Wir arbeiten daran = We’re working on it.
• aber es ist nicht leicht = but it isn’t easy.

The it is the work/task/problem mentioned indirectly by daran.

Yes, often you can.

• Es ist nicht leicht.
• Es ist nicht einfach.

Both can mean It’s not easy.

But there can be a small nuance:

• leicht often stresses ease/difficulty
• einfach can stress simplicity as well as ease

In many everyday contexts, they are very close. In this sentence, both would sound natural.

Because in a normal main clause, the verb phrase is split according to standard German word order:

• Wir = subject
• arbeiten = conjugated verb in second position
• daran = prepositional element/complement

So:

• Wir arbeiten daran.

This is the normal order. German is somewhat flexible, but this is the most neutral and natural version.

Yes, very much so.

An etwas arbeiten / daran arbeiten is a very common expression meaning:

• to work on something
• to be making progress on something
• to be trying to improve something

It can be used for concrete things:

• Wir arbeiten daran, das Haus zu renovieren.

And also abstract things:

• Ich arbeite daran, geduldiger zu werden.

So in your sentence, it sounds completely idiomatic and natural.

In a subordinate clause, the conjugated verb goes to the end.

Main clause:

• Wir arbeiten daran.

Subordinate clause:

• ..., weil wir daran arbeiten.

With the full idea:

• Wir arbeiten daran, aber es ist nicht leicht.
• Ich weiß, dass wir daran arbeiten.

So daran stays together with the idea of an etwas arbeiten, but the conjugated verb changes position depending on clause type.