Varningurinn er á söluborðinu.

It has a very straightforward structure:

• Varningurinn = the subject
• er = the verb, is
• á söluborðinu = a prepositional phrase showing location, on the sales counter/display table

So the pattern is basically:

subject + verb + place

That is very similar to normal English word order.

In Icelandic, the definite article is often attached to the end of the noun instead of being a separate word.

So here:

• varningur = merchandise / goods
• varningurinn = the merchandise

And:

• söluborð = sales table / display counter
• söluborðinu = the sales table / counter, in a case form required by the preposition

This is one of the biggest differences from English: Icelandic often puts the at the end of the noun.

Varningurinn is the definite form of varningur.

Breaking it down:

• varningur = merchandise, wares, goods
• -inn = the definite ending here

So varningurinn means the merchandise or the goods.

Grammatically, it is:

• masculine
• singular
• nominative
  because it is the subject of the sentence.

Because varningurinn is grammatically singular.

• er = is for a singular subject
• eru = are for a plural subject

This can feel a little strange to an English speaker because English often uses goods as a plural word. But Icelandic varningur is a singular noun, even though its meaning can refer to a collection of items.

So Icelandic says:

• Varningurinn er ... = The merchandise is ...

not eru.

Because it is in the dative singular definite form.

The base noun is:

• söluborð = sales table / display table / counter

After the preposition á, Icelandic uses:

• dative for location: on, at
• accusative for motion toward: onto

Here the meaning is location, not movement, so we get:

• á söluborðinu = on the sales counter

The ending -inu shows both:

• the definite article
• the correct case for this sentence

This is a very important Icelandic case distinction.

• á söluborðinu = on the sales counter

  • location
  • dative

• á söluborðið = onto the sales counter

  • movement toward something
  • accusative

So:

• Varningurinn er á söluborðinu.
  = The merchandise is on the sales counter.

But something like:

• Settu varninginn á söluborðið.
  = Put the merchandise onto the sales counter.

Same preposition, different case, different meaning.

Here á means on.

In Icelandic, á can sometimes be translated as:

• on
• at
• sometimes even other related meanings depending on context

In this sentence, the most natural meaning is on:

• á söluborðinu = on the sales counter

So the physical-location meaning is the important one here.

Yes. Icelandic uses compound words very often.

Söluborð is made from:

• sala = sale
• sölu- = sale/sales, used as a combining form
• borð = table

So söluborð is literally something like sales-table.

A natural English translation would be:

• sales counter
• display table
• shop counter

depending on context.

Yes, but the sentence you have is the neutral, straightforward order.

Normal order:

• Varningurinn er á söluborðinu.

You could also say:

• Á söluborðinu er varningurinn.

That puts more emphasis on the location, something like:

• On the sales counter is the merchandise
• or more naturally, The merchandise is on the sales counter

Icelandic often allows this kind of movement, but the verb still tends to stay in the second position.

You can, but the meaning changes.

• Varningurinn er á söluborðinu.
  = The merchandise is on the sales counter.

• Varningur er á söluborðinu.
  = Merchandise is on the sales counter. / There is merchandise on the sales counter.

Without the definite ending, the noun is more indefinite or generic.

English often uses articles very differently, so it is worth paying attention to whether Icelandic uses the suffixed the or not.

A few things usually stand out to English speakers:

• á sounds roughly like the ow in now
• ð in borðinu is like th in this
• ö in sölu- does not have a perfect English equivalent; it is similar to German ö
• Icelandic usually stresses the first syllable of the word

Very rough guides:

• Varningurinn → stress on VAR-
• söluborðinu → stress on SÖ-

Also, Icelandic spelling is quite consistent, so once you learn the sound rules, pronunciation becomes much easier to predict.