Vatn er nauðsynlegt í svona hita, og það væri óþarfi að bíða of lengi með að drekka.

Because vatn here means water in general, not a specific glass or body of water. Icelandic often leaves off the article with mass nouns when speaking generally, just as English usually says Water is important, not The water is important.

• vatn = water, water in general
• vatnið = the water, a specific water already known from context

So Vatn er nauðsynlegt is the natural general statement.

Because it agrees with vatn, which is a neuter singular noun.

In Icelandic, adjectives used after vera still agree with the noun they describe:

• vatn = neuter singular
• nauðsynlegt = neuter singular form of nauðsynlegur

Compare:

• Vatn er nauðsynlegt = Water is necessary
• Matur er nauðsynlegur = Food is necessary
• Sól er nauðsynleg? No, because sól is feminine, so it would be nauðsynleg

So the ending tells you the gender and number match.

svona means something like like this, this kind of, or such.

In í svona hita, it means:

• in heat like this
• more naturally in English: in this kind of heat

A useful thing to know is that svona does not change form for gender, number, or case. It stays svona.

Examples:

• svona veður = weather like this
• svona dagur = a day like this
• svona aðstæður = conditions like this

Because the preposition í takes the dative when it means in in the sense of location or state, rather than motion into something.

Here, í svona hita means in this kind of heat, so it is a state/situation, and hiti appears in the dative singular:

• nominative: hiti
• dative: hita

So:

• í hita = in heat
• í svona hita = in this kind of heat

This is a very common Icelandic pattern:

• í húsinu = in the house
• í skóla = in school
• í kulda = in the cold

Here það is a dummy subject, like English it in sentences such as:

• It is important to rest
• It would be silly to wait

The real content comes in the infinitive clause að bíða of lengi með að drekka, but Icelandic often uses það first:

• það væri óþarfi að... = it would be unnecessary to...

So það does not refer to a specific thing like the water. It is just there because the sentence needs a subject.

væri is the past subjunctive form of vera and is often used to express something hypothetical, conditional, or softer/more tentative. In English, it often corresponds to would be.

So:

• það er óþarfi = it is unnecessary / there is no need
• það væri óþarfi = it would be unnecessary / there would be no need

In this sentence, the speaker is making a judgment in a slightly hypothetical or advisory way, so væri fits well.

This is a very common Icelandic pattern:

• Það væri gott = That would be good
• Það væri betra að fara núna = It would be better to go now

In this pattern, óþarfi is best learned as part of the expression:

• það er óþarfi að...
• það væri óþarfi að...

This means:

• there is no need to...
• it is unnecessary to...
• sometimes even it would be pointless to..., depending on context

So það væri óþarfi að bíða of lengi... means that waiting too long would serve no useful purpose.

A good comparison:

• Það er óþarfi að hafa áhyggjur = There is no need to worry
• Það væri óþarfi að tefja þetta = It would be unnecessary / pointless to delay this

Because the two að's are doing different jobs.

1. að in óþarfi að bíða...
   This introduces the infinitive clause to wait...

2. að in með að drekka
   This is part of the pattern með að + infinitive, which means with doing / in doing / to do, but in this context is part of the expression bíða með að...

So the structure is:

• það væri óþarfi
• að bíða of lengi
• með að drekka

Literally, something like:

• it would be unnecessary to wait too long with drinking

But natural English is:

• it would be unnecessary to wait too long before drinking
• or there would be no point in waiting too long to drink

Because Icelandic commonly uses bíða með að + infinitive to mean delay doing something or wait before doing something.

So:

• bíða með að drekka = wait before drinking / put off drinking
• bíða með að svara = wait before answering
• bíða með að fara = wait before leaving

This is more idiomatic than bíða að drekka, which would generally not be the normal way to express this idea.

So the sentence is not just about waiting in general; it is specifically about delaying the act of drinking.

No. Icelandic of here means too, not English of.

So:

• lengi = long / for a long time
• of lengi = too long / for too long

Examples:

• of heitt = too hot
• of mikið = too much
• of seint = too late

So að bíða of lengi means to wait too long.

Icelandic often uses the infinitive where English might use either an infinitive or a gerund.

So Icelandic says:

• með að drekka
  literally something like with to drink

But the natural meaning is:

• before drinking
• to drink
• in drinking

depending on context.

This is very normal in Icelandic. Do not expect it to line up word-for-word with English verbal forms. In this sentence, að drekka is simply the standard way to express the action to drink after með að.