Við stöndum aftast í röðinni.

Because the verb is standa (to stand), and the vowel changes in some forms.

• infinitive: standa
• við form in the present tense: við stöndum

This is a common kind of vowel change in Icelandic verbs. So stöndum simply means we stand / we are standing.

Icelandic often uses the simple present where English uses am/is/are + -ing.

So:

• Við stöndum = we stand or we are standing

In this sentence, the meaning is naturally we are standing because it describes a current situation.

Við means we.

It is the nominative plural pronoun, used as the subject of the sentence:

• Við stöndum = We are standing

Aftast means furthest back, at the back, or in the last position.

It is the superlative form of an adverb related to aftur / aftar (back / further back).

So the idea is not just back, but the farthest back position in the line.

Because aftast focuses on physical position: being at the back.

In a line, English often says last in line, but Icelandic can express this as being furthest back in the line:

• aftast í röðinni = at the back of the line

A word like síðastur/síðast is more directly last, but aftast is very natural when talking about spatial position.

The preposition í means in.

So:

• í röðinni = in the line
• more naturally in English: in line or in the queue

Icelandic uses the preposition here where English might use either in or no preposition in a more idiomatic translation.

Röðinni is the dative singular definite form of röð (line, row, queue).

Here is the breakdown:

• röð = a line / a queue
• röðin = the line
• röðinni = to/in/from the line, depending on context and preposition

After í, Icelandic uses:

• accusative for motion into something
• dative for location in something

Since this sentence describes location, not movement, it uses the dative:

• í röðinni = in the line

In Icelandic, the is usually added to the end of the noun instead of appearing as a separate word.

So rather than a separate word like English the line, Icelandic often has a single word:

• röðin = the line
• röðinni = in the line / the line in the dative

This attached the is one of the most important features of Icelandic nouns.

It can mean all of those depending on context.

Common meanings include:

• line
• row
• queue
• order / sequence in some contexts

In Við stöndum aftast í röðinni, the meaning is clearly queue / line of people.

Yes.

Because Icelandic present tense often covers both ideas, Við stöndum aftast í röðinni can mean:

• We stand at the back of the line
• We are standing at the back of the line

In normal context, English would usually prefer We are standing at the back of the line.

The given word order is natural and neutral:

• Við stöndum aftast í röðinni.

It puts the focus in a very straightforward way: We + are standing + furthest back + in the line.

Icelandic word order is somewhat flexible, and other orders may be possible for emphasis, but this version is the standard, uncomplicated one for a learner to use.

A very useful phrase is:

• aftast í röðinni = at the back of the line

You can use it in other sentences too, for example:

• Hann stendur aftast í röðinni. = He is standing at the back of the line.
• Við erum aftast í röðinni. = We are at the back of the line.

So this chunk is worth learning as a set phrase.