Das Baby krabbelt im Wohnzimmer herum.

Because Baby is a neuter noun in German, so it takes the article das.

• das Baby = the baby

This is about grammatical gender, not biological sex. Even if the baby is a boy or a girl, the noun Baby still uses das.

A very common point for English speakers: German noun gender often does not match natural gender.

Krabbelt is the 3rd person singular form of the verb krabbeln.

The subject is das Baby, which is grammatically it, so German uses the same verb form it would use with er/sie/es:

• ich krabble
• du krabbelst
• er/sie/es krabbelt
• wir krabbeln
• ihr krabbelt
• sie/Sie krabbeln

So:

• Das Baby krabbelt = The baby crawls / is crawling

Krabbeln usually means to crawl, especially the way a baby moves on hands and knees.

It can also sometimes be used for small creatures like insects, depending on context, but with Baby the meaning is clearly to crawl.

So krabbeln is more specific than a general verb like sich bewegen (to move).

Im is a contraction of in dem.

• in dem Wohnzimmer → im Wohnzimmer

This is very common in German and is the normal form here.

So:

• im Wohnzimmer = in the living room

Because this sentence describes location, not direction toward a destination.

German uses different cases after in depending on the meaning:

• dative for location: where something is happening
• accusative for direction/movement into somewhere

Here, the baby is already crawling in the living room, so German uses the dative:

• im Wohnzimmer = in the living room

If the sentence meant the baby was crawling into the living room, you would use the accusative:

• Das Baby krabbelt ins Wohnzimmer.
  = The baby crawls into the living room.

So:

• im Wohnzimmer = in the living room
• ins Wohnzimmer = into the living room

Herum adds the idea of around, about, or here and there.

So:

• krabbeln = to crawl
• herumkrabbeln / krabbelt herum = to crawl around

Without herum, the sentence would simply say that the baby is crawling.
With herum, it sounds more like the baby is moving around the room in a general, perhaps playful or wandering way.

Because this is a separable verb structure.

The full verb is often thought of as herumkrabbeln (to crawl around). In a main clause with a conjugated verb, German usually splits separable verbs:

• Das Baby krabbelt ... herum.

So:

• the main verb part krabbelt goes in the usual verb position
• the separable prefix herum goes to the end

Compare:

• Das Baby krabbelt herum.
• Das Baby hat im Wohnzimmer herumgekrabbelt.

In the second example, the structure changes because of the perfect tense, but herum still stays attached to the verbal idea.

German main clauses usually put the finite verb in second position.

Here the structure is:

• Das Baby = subject
• krabbelt = finite verb
• im Wohnzimmer = location
• herum = separable prefix / particle at the end

So the sentence follows a very normal German pattern.

You could also move another element to the front for emphasis:

• Im Wohnzimmer krabbelt das Baby herum.

That is also correct, but then the verb still has to stay in second position, so das Baby moves after the verb.

Yes. German very often forms compound nouns by joining words together.

• wohnen = to live/reside
• Zimmer = room
• Wohnzimmer = living room

English often writes these as separate words, but German usually combines them into one noun.

This is completely normal in German:

• Schlafzimmer = bedroom
• Badezimmer = bathroom
• Kinderzimmer = children’s room / child’s room

Because all nouns are capitalized in German.

So in this sentence:

• das Baby
• im Wohnzimmer

Both Baby and Wohnzimmer are nouns, so they begin with capital letters.

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

Yes.

• Das Baby krabbelt im Wohnzimmer.
  = The baby is crawling in the living room.

This is grammatical and natural.
Adding herum just gives a slightly fuller sense of crawling around rather than simply crawling.

So the version with herum is a bit more vivid.

Yes. It is in the simple present tense:

• Das Baby krabbelt im Wohnzimmer herum.

In German, the present tense often covers both meanings that English separates into:

• The baby crawls around in the living room.
• The baby is crawling around in the living room.

Which English translation fits best depends on context.

So German does not need a separate form here to say is crawling.