Atviksorðið stendur oft seint í setningunni.

It means the adverb.

More specifically:

• atviksorð = adverb
• atviksorðið = the adverb

In this sentence, it is the subject, so it is in the nominative singular definite form.

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

Icelandic usually puts the at the end of the noun instead of using a separate word:

• atviksorð = an adverb / adverb
• atviksorðið = the adverb

Because atviksorð is a neuter noun, -ið is the expected definite ending here.

Yes, stendur literally means stands, from the verb standa.

But in Icelandic, standa is also commonly used to mean that something is positioned, placed, or appears somewhere. So here:

• Atviksorðið stendur ... í setningunni
  = The adverb stands / is placed ... in the sentence

This is a normal and idiomatic way to talk about where a word appears in a sentence.

This follows a very important Icelandic word-order pattern: the finite verb usually comes in second position in a main clause.

Here the order is:

• Atviksorðið = first element
• stendur = second element

That is completely normal Icelandic structure.

For example, if you moved oft to the front, the verb would still usually stay second:

• Oft stendur atviksorðið seint í setningunni.

So this sentence is a good example of Icelandic V2 word order.

They do two different jobs:

• oft = often
  This tells you how frequently something happens.
• seint = late
  This tells you where in the sentence the adverb tends to appear.

So the idea is:

• often
  • late in the sentence

They are not repeating the same meaning. One is about frequency, and the other is about position.

It often is about time, but it can also mean late in an order or sequence.

So here seint í setningunni means:

• late in the sentence
• toward the end of the sentence

That is similar to English, where late can also refer to position in a sequence, not just time.

Also, seint is the adverb form related to seinn (late).

setningunni is in the dative singular definite.

That happens because the preposition í can take two different cases:

• accusative for movement into
• dative for location in

Here the meaning is location:

• the adverb stands in the sentence

So Icelandic uses í + dative:

• í setningunni = in the sentence

The basic noun is:

• setning = sentence

It is the form of the noun setning with both:

• the dative singular ending
• the definite article

So:

• setning = sentence
• setningunni = the sentence in the dative singular

This is very typical Icelandic. Instead of using a separate word for the, Icelandic usually attaches it to the noun.

People would probably understand it, but stendur is more natural here.

Why?

Because when Icelandic talks about where a word or phrase is placed in a sentence, standa is a very common verb. It suggests position or placement.

Using er would sound less idiomatic, more like you are simply saying the adverb is late, rather than that it appears late or stands late in the sentence.

So stendur is the better choice in this context.

No. Icelandic does not capitalize all nouns.

It is capitalized here only because it is the first word of the sentence.

So unlike German, Icelandic writes ordinary nouns with a lowercase letter unless they begin a sentence or are part of a proper name.