Sviðið lítur lítið út, en ljósin eru falleg.

Sviðið means the stage here.

The base noun is svið, which is a neuter noun. Icelandic usually adds the definite article to the end of the noun instead of using a separate word like the in English.

So:

• svið = stage
• sviðið = the stage

That final -ið is the definite article for this form of the noun.

Yes. Líta út is a very common Icelandic verb expression meaning to look or to appear.

In this sentence:

• lítur = looks / appears
• út is the particle that belongs with the verb

So lítur út works together as looks.

A good way to think of it is as a phrasal verb, a bit like English look like, look out, come in, etc., except Icelandic often separates the parts.

Because Icelandic often splits this kind of verb expression.

In Sviðið lítur lítið út:

• lítur is the finite verb
• lítið describes how the stage looks
• út comes later as the particle belonging to líta út

This placement is very natural in Icelandic. You will often see:

• Hann lítur vel út. = He looks good.
• Herbergið lítur stórt út. = The room looks big.

So lítur lítið út is a normal pattern.

Here it is best understood as an adjective used predicatively: small.

It agrees with sviðið, which is:

• neuter
• singular

So the adjective appears in the neuter singular form:

• dictionary form: lítill = small
• neuter singular: lítið

That is why you get:

• sviðið → neuter singular
• lítið → neuter singular

So the meaning is The stage looks small.

A learner may notice that lítið can also look like an adverb in other contexts, but in this sentence it matches the subject and functions like small, not a little.

Yes. Sviðið er lítið means The stage is small.

The difference is:

• Sviðið er lítið = it is small
• Sviðið lítur lítið út = it looks small / it appears small

So líta út adds the idea of appearance rather than a plain statement of fact.

Ljósin means the lights.

The base noun is ljós, a neuter noun. Here it is in the plural definite form:

• ljós = light / lights
• ljósin = the lights

It is plural because the sentence is talking about multiple lights, not just one.

Because falleg has to agree with ljósin.

Here:

• ljósin is plural
• it is neuter
• so the adjective must also be neuter plural

That gives:

• falleg = beautiful for neuter plural

So:

• ljósið er fallegt = the light is beautiful
• ljósin eru falleg = the lights are beautiful

Also, after verbs like vera (to be), Icelandic usually uses the adjective in its predicative form, not the form you would use directly before a noun.

So you say:

• falleg ljós = beautiful lights
• ljósin eru falleg = the lights are beautiful

En means but.

It connects the two parts of the sentence:

• Sviðið lítur lítið út = The stage looks small
• en ljósin eru falleg = but the lights are beautiful

So the whole sentence contrasts the two ideas.

Because Icelandic usually puts the definite article onto the end of the noun.

In this sentence:

• sviðið = the stage
• ljósin = the lights

So instead of a separate word like English the, Icelandic often uses a noun ending.

This is one of the first big differences English speakers notice in Icelandic.

Adjectives in Icelandic change form to match the noun they describe in gender and number.

In this sentence:

• sviðið is neuter singular
• so lítið is neuter singular

and

• ljósin is neuter plural
• so falleg is neuter plural

That agreement is an important part of Icelandic grammar. English usually does not do this, so it often feels new to learners.

A very rough English-style guide would be:

• Sviðið ≈ SVIH-thith
• lítur ≈ LEE-tur
• lítið ≈ LEE-tith
• út ≈ oot
• ljósin ≈ LYOH-sin
• eru ≈ EH-ru
• falleg ≈ FAT-leg or FAHT-leg

A few useful notes:

• í is like ee
• ú is like oo
• ð is like the th in this
• lj is a sound English does not have exactly, but ly is a decent approximation for beginners

These are only rough guides, but they are enough to get you started.