Setningin er skýr.

Icelandic usually expresses the with a suffix (a “postposed definite article”) attached to the noun.

• setning = sentence (indefinite)
• setningin = the sentence (definite)
  The ending -in here is the definite ending for a feminine singular noun in the nominative.

Setning is feminine in Icelandic. Gender is mostly something you learn with the noun, but you can often see it in agreement and endings:

• The definite form setningin uses the feminine definite ending pattern.
• In other cases you’ll see forms like setningu (acc./dat. sg.) and setningar (gen. sg.), which match common feminine declension patterns.

It actually is matching. The adjective skýr is one of those adjectives whose masculine and feminine nominative singular forms look the same:

• masc. nom. sg.: skýr
• fem. nom. sg.: skýr
• neut. nom. sg.: skýrt
  So you don’t see a difference between masculine and feminine here, but agreement is still happening.

Yes—when you say X is Y with vera, the adjective typically agrees with the subject in:

• gender
• number
• case (usually nominative here)

Example (plural feminine):

• Setningarnar eru skýrar. = The sentences are clear.
  Here you can clearly see agreement: skýrar (fem. nom. plural).

Er is the present tense, 3rd person singular form of vera (to be).
You use er because setningin is singular.

For comparison:

• ég er (I am)
• þú ert (you are)
• hann/hún/það er (he/she/it is)
• við/þið/þeir/þær/þau eru (we/you(pl)/they are)

You’d usually make the noun indefinite:

• Ein setning er skýr. = A sentence is clear. (literally one sentence)

Just Setning er skýr can sound more like a general statement/title style; in normal speech, ein is often used to clearly signal “a”.

A practical guide:

• Stress is almost always on the first syllable: SET-ningin
• ý is like a long ee sound (similar to see), but Icelandic pronunciation is more “tight/forward” in the mouth.
• sk before a front vowel (like ý) is pronounced like [sc] (similar to sky but with a slightly palatal quality).

Rough approximation: SET-ning-in er skeer (with a rolled/tapped r).

No—skýr has a few common related meanings depending on context, such as:

• clear / understandable (a clear sentence, a clear explanation)
• distinct / explicit (clear instructions)
• bright / vivid (clear colors)
• sometimes clear as in not cloudy (about liquids or weather, depending on usage)

So in Setningin er skýr, the most natural interpretation is “clear/understandable.”