Gámasvæðið er við grenndarstöðina.

It is the suffixed definite article, so Gámasvæðið means the container area rather than just container area.

A useful breakdown is:

• gámasvæði = container area
• gámasvæðið = the container area

In Icelandic, the definite article is usually attached to the end of the noun instead of being a separate word like the in English.

Because Icelandic uses compound nouns very freely, much like German.

So gámasvæði is made from:

• gáma- = of containers
• svæði = area

Literally, it is something like area of containers, but in natural English that becomes container area.

In Icelandic, compounds like this are normally written as one word, not two.

Yes, it comes from the noun gámur meaning container / bin / dumpster, and gáma- is based on its genitive plural form.

This is very common in Icelandic compounds: the first part often appears in a genitive form.

So:

• gámur = container
• gáma- = of containers

That is why the compound has the sense container area rather than just container-area as two separate nouns.

Because here the noun is:

1. definite: the neighborhood station
2. in the accusative singular after the preposition við

So the base noun is:

• grenndarstöð = neighborhood station / local collection station

And the form in the sentence is:

• grenndarstöðina = the neighborhood station

The ending -ina shows the definite article on a feminine singular noun in this form.

Because við normally governs the accusative in modern Icelandic.

So after við, you expect an accusative noun phrase:

• við grenndarstöðina

Even though the meaning in English is static location, like by or next to, Icelandic still uses við with the accusative here.

No. In this sentence, við means something like:

• by
• next to
• at
• beside

It often has a physical-location meaning.

So although learners may first meet við in contexts where it can look like with, that is not the meaning here.

The two main nouns have different genders:

• svæði is neuter
• stöð is feminine

That helps explain the different endings:

• Gámasvæðið: neuter singular definite
• grenndarstöðina: feminine singular definite accusative

Gender matters a lot in Icelandic because it affects articles, adjectives, and some endings.

This is a normal Icelandic main-clause pattern:

• subject
  • verb
    • other information

So:

• Gámasvæðið = subject
• er = is
• við grenndarstöðina = location phrase

It also fits Icelandic’s verb-second tendency: the finite verb er comes early in the clause, in second position.

For example, you could also move the location first:

• Við grenndarstöðina er gámasvæðið.

That is still grammatical because er remains in second position.

Because Icelandic often marks definiteness directly on the noun, and here both refer to specific, identifiable things:

• Gámasvæðið = the container area
• grenndarstöðina = the neighborhood station

English sometimes uses fewer definite forms depending on context, but Icelandic commonly marks both if both are definite.

A rough learner-friendly guide:

• Gáma-: GAU-ma
  
  • á sounds roughly like the ow in cow
• svæði: roughly svai-thi or svai-yi depending on how carefully it is spoken
  
  • æ sounds roughly like eye
  • ð is a soft sound like th in this, though it can be very light
• grenndarstöðina: roughly GREND-na-stuh-thi-na
  • ö is a rounded vowel, somewhat like German ö
  • again, ð is soft

Also remember that Icelandic usually stresses the first syllable of the word.

Yes.

It is built from:

• grennd = neighborhood / nearby area
• stöð = station

So grenndarstöð is literally something like neighborhood station.

This is another very typical Icelandic compound noun. Once you get used to compounds, long Icelandic words become much easier to understand.