Svefnloftið er lítið.

Svefnloftið is a compound noun:

• svefn = sleep
• loft = loft, attic, or a raised sleeping/storage space
• -ið = the (the definite article attached to the end)

So svefnloftið literally means something like the sleep-loft, usually best understood as the sleeping loft.

This kind of compounding is very common in Icelandic.

In Icelandic, the definite article is usually added to the end of the noun instead of appearing as a separate word like English the.

So:

• svefnloft = a sleeping loft / sleeping loft
• svefnloftið = the sleeping loft

This is a very common pattern in Icelandic. English uses a separate word; Icelandic often uses an ending.

Because the adjective has to agree with the noun in gender and number.

The noun loft is neuter singular, so the adjective lítill (small) must also appear in the neuter singular form:

• masculine: lítill
• feminine: lítil
• neuter: lítið

So:

• Svefnloftið er lítið. = The sleeping loft is small.

Even though lítið can also mean little in some contexts, here it is simply the correct neuter form of lítill.

You mainly learn a noun’s gender as part of the word itself. Icelandic nouns are masculine, feminine, or neuter, and that affects articles, adjectives, and sometimes pronouns.

Here, one clue is the definite form:

• loft
• loftið

The ending -ið is a common definite ending for neuter singular nouns.

Because svefnloft is built on loft, the whole compound is also neuter.

Er means is.

It is the present tense, 3rd person singular form of the verb vera (to be).

So:

• er = is

In this sentence:

• Svefnloftið er lítið.
• The sleeping loft is small.

In this simple sentence, yes:

• Svefnloftið = subject
• er = verb
• lítið = subject complement / adjective

So the structure is basically:

• The sleeping loft
  • is
    • small

That said, Icelandic word order can be more flexible than English, especially because of the verb-second pattern in many clauses. But in a basic statement like this, it looks very similar to English.

Here it is working as a predicate adjective: it comes after er and describes the subject.

So this is not:

• the small sleeping loft

It is:

• the sleeping loft is small

That distinction matters in Icelandic, because adjective forms and article placement can behave differently depending on whether the adjective is used attributively (before a noun) or predicatively (after to be).

A rough learner-friendly pronunciation is:

SVEFN-loft-ith er LIT-ith

A few useful notes:

• sv is pronounced much like English sv in careful speech
• fnl in svefnloftið can feel a bit crowded; consonant clusters are common in Icelandic
• í is a long ee-like vowel
• ð is like the th in this

So lítið sounds roughly like LEE-tith, though Icelandic vowel quality is not exactly the same as English.

Yes. That is exactly the right way to think about it.

Icelandic very often forms new nouns by combining existing ones. In many cases, English would use either:

• a compound noun
• a phrase with of
• or an adjective + noun combination

Here Icelandic uses one compound word:

• svefn
  • loft → svefnloft

Learning to spot compounds is extremely helpful, because long Icelandic words often become much easier once you break them into parts.

Usually, no—not in the same natural way.

Svefnloftið er lítið means The sleeping loft is small, referring to a specific loft.

Without the definite ending, svefnloft would be indefinite, but Icelandic does not use indefinites exactly like English. A bare noun can sometimes be used in general statements, but Svefnloft er lítið would not normally be the natural equivalent of A sleeping loft is small in ordinary speech.

So for this sentence, the definite form svefnloftið is the normal one.