Raftækið er bilað.

It is a compound noun:

• raf- = electrical, electric
• tæki = device, appliance, piece of equipment
• -ið = the

So raftækið means the electrical device or the appliance.

The first part raf- is related to rafmagn, meaning electricity.

In Icelandic, the definite article is very often added as a suffix instead of being a separate word.

So:

• raftæki = an electrical device / electrical device
• raftækið = the electrical device

That final -ið is the neuter singular definite ending here.

Er is the present tense of að vera, meaning to be.

In this sentence, it means is:

• Raftækið er bilað = The electrical device is broken / not working

It is the 3rd person singular form, used with he, she, or it.

Bilað comes from að bila, which means to break down, to malfunction, or to stop working.

Here it functions like an adjective after er, so it means something like:

• broken
• out of order
• not working
• malfunctioning

So this sentence is describing the condition of the device.

Because Icelandic adjectives agree with the noun in gender and number.

Raftæki is a neuter singular noun, so the adjective must also be neuter singular:

• masculine: bilaður
• feminine: biluð
• neuter: bilað

That is why the sentence uses bilað.

Not necessarily.

Bilað usually means not functioning properly or has broken down. It is often used for machines, appliances, electronics, cars, and similar things.

So it usually suggests malfunction, not necessarily visible physical damage.

If something is literally broken in the sense of snapped, shattered, or smashed, Icelandic may use other words depending on the situation, such as brotið.

One clue is the definite form raftækið. The ending -ið is a very common neuter singular definite ending.

Also, many Icelandic neuter nouns have no special ending in the indefinite singular dictionary form, and tæki is one of them.

In practice, gender is something you often learn together with the noun. So it is good to memorize:

• raftæki = neuter noun

That will help you choose the right adjective forms later.

You usually make a yes-no question by putting the verb first:

• Er raftækið bilað? = Is the electrical device broken?

So the statement:

• Raftækið er bilað.

becomes the question:

• Er raftækið bilað?

You would normally look up the base forms, not the exact sentence forms:

• look up raftæki, not raftækið
• look up að bila or sometimes bilaður, not just bilað
• look up að vera for er

That is useful because Icelandic words change form a lot depending on grammar.

A rough English-friendly approximation is:

RAF-tye-kith er BI-la(th)

A few helpful notes:

• æ sounds roughly like eye
• ð is a soft th sound, like in this, though at the end it can sound very light
• er is pronounced like ehr

The exact Icelandic pronunciation is a bit subtler than any English spelling, but that approximation is a good start.