Lyklaboxið er úti.

Because lyklaboxið is a compound noun:

• lykill = key
• box = box
• lyklabox = key box

In Icelandic compounds, the first part often appears in a special linking form. Here, lykill becomes lykla-, which is historically the genitive plural form.

So lyklabox is literally something like box of keys, but naturally it just means key box.

Important: the whole noun can still be singular even if the first part looks plural-ish.
So lyklaboxið is the key box, not the key boxes.

The ending -ið is the definite article attached to the noun.

Icelandic usually does not use a separate word for the the way English does. Instead, it adds the article to the end of the noun:

• lyklabox = a key box / key box
• lyklaboxið = the key box

So -ið here means the.

This is very normal in Icelandic and one of the first big differences English speakers notice.

The dictionary form is lyklabox.

Its gender is neuter, which is why the definite ending is -ið.

So the basic breakdown is:

• lyklabox = neuter singular noun
• lyklaboxið = neuter singular definite form

Knowing the gender matters in Icelandic because it affects:

• articles
• adjectives
• pronouns
• some inflection patterns

Er is the present tense, 3rd person singular form of vera, which means to be.

So:

• ég er = I am
• þú ert = you are
• hann / hún / það er = he / she / it is

Since lyklaboxið is a singular thing, Icelandic uses er:

• Lyklaboxið er úti.

This works just like English is in The key box is outside.

Úti is an adverb, not an adjective.

It means outside / outdoors in the sense of location.

That is why it does not change form to match the noun. It stays úti no matter what the subject is:

• Lyklaboxið er úti.
• Bíllinn er úti.
• Krakkarnir eru úti.

In all of these, úti stays the same.

This is a very common question.

• úti usually describes location: being outside
• út usually describes movement: out, outward

So:

• Lyklaboxið er úti. = the key box is outside
  
  • location

But compare:

• Hann fer út. = he goes out
  
  • movement

A good shortcut is:

• úti = outside
• út = out

Here lyklaboxið is in the nominative case because it is the subject of the sentence.

The sentence structure is basically:

• Lyklaboxið = subject
• er = verb
• úti = adverb of location

So this is the ordinary subject form of the noun.

Yes, this sentence has a very straightforward word order:

• Lyklaboxið = subject
• er = verb
• úti = adverb

So it matches normal English order very closely.

However, Icelandic is a V2 language, which means the finite verb often stays in the second position in main clauses. Because of that, other word orders are possible for emphasis, for example:

• Úti er lyklaboxið.

That is possible, but it sounds more marked or focused, something like Outside is where the key box is or The key box is outside with extra emphasis on outside.

For a neutral statement, Lyklaboxið er úti is the most natural.

A rough learner-friendly approximation is:

• Lyklaboxið ≈ LIK-la-bok-sith
• er ≈ ehr
• úti ≈ OO-ti

A few helpful notes:

• Icelandic stress is usually on the first syllable
• x is pronounced like ks
• ú is a long oo sound
• ð is a soft sound like the th in this, though it can sound very light at the end of a word

So the whole sentence is roughly:

LIK-la-bok-sith ehr OO-ti

That is only an approximation, but it is a good starting point.