Ég set lykilinn á borðið.

The verb is setja, meaning to put / to place / to set.

Set is the 1st person singular present tense:

• ég set = I put / I am putting
• þú setur = you put
• hann/hún/það setur = he/she/it puts

So Ég set ... means I put ... or I am putting ..., depending on context.

Word by word:

• Ég = I
• set = put / am putting
• lykilinn = the key
• á = on / onto
• borðið = the table

A very literal breakdown is:

I put the key onto the table.

The dictionary form is lykill = key.

In this sentence, the key is the direct object of the verb setja, so it has to be in the accusative case.
For this noun:

• nominative singular: lykill
• accusative singular: lykil

Then the definite article -inn is added:

• lykil + inn = lykilinn

So:

• lykill = a key / the key in dictionary form context
• lykilinn = the key as an accusative direct object

In Icelandic, the is usually not a separate word like in English. It is normally attached to the end of the noun.

Here you have:

• lykill = key
• lykillinn / lykilinn = the key
  (the exact form changes with case)

And:

• borð = table
• borðið = the table

So instead of English the key and the table, Icelandic says lykillinn/lykilinn and borðið.

Because á is used for being on a surface or moving onto a surface.

A table is treated as a surface, so:

• á borðið = onto the table
• á borðinu = on the table

By contrast, í means in / into, for something going inside something:

• í skúffuna = into the drawer

So a key goes á borðið if you put it on the table, but í skúffuna if you put it into the drawer.

This is a very important Icelandic pattern.

With prepositions like á, Icelandic often uses:

• accusative for motion toward a place
• dative for location in a place

So:

• Ég set lykilinn á borðið. = I put the key onto the table.
  → motion, so accusative
• Lykillinn er á borðinu. = The key is on the table.
  → location, so dative

That is why borðið is correct here: the key is being moved onto the table.

Because borð is a neuter noun, and for many neuter nouns, the nominative and accusative singular are identical.

So:

• nominative singular: borð
• accusative singular: borð

With the definite article:

• borðið can be nominative or accusative, depending on the sentence

In this sentence, it is understood as accusative because it comes after á in a motion meaning: onto the table.

It can mean either, depending on context.

The Icelandic present tense often covers both:

• I put
• I am putting

So Ég set lykilinn á borðið could be understood as:

• I put the key on the table
• I am putting the key on the table

If Icelandic wants to emphasize an action that is happening right now, it can also use:

• Ég er að setja lykilinn á borðið.

That is more like I am in the process of putting the key on the table.

Yes, very often you could.

• setja = put / place in a general sense
• leggja = lay / put down, often especially onto a surface

So both can work, but there is a slight nuance:

• Ég set lykilinn á borðið = I put/place the key on the table
• Ég legg lykilinn á borðið = I lay/put the key down on the table

If you are specifically placing the key down on the table surface, leggja can sound especially natural.

The normal, neutral word order here is:

Subject + Verb + Object + Place

• Ég
  • set
    • lykilinn
      • á borðið

So Ég set lykilinn á borðið is the most straightforward version.

Icelandic word order is somewhat flexible, though, especially for emphasis. For example:

• Lykilinn set ég á borðið.

This puts more emphasis on the key. But for a basic statement, the original order is the most natural.

Normally, no. Icelandic usually keeps the subject pronoun in ordinary sentences.

So:

• Ég set lykilinn á borðið. = normal
• Set lykilinn á borðið. = not a normal full statement

Even though the verb form set shows 1st person singular, Icelandic is not like Spanish or Italian in regularly dropping the subject pronoun.

If you wanted a command, you would use a different form altogether:

• Settu lykilinn á borðið. = Put the key on the table.