Í fyrstu skildi ég þetta ekki, en nú skil ég það.

It means at first or initially.

In this sentence, í fyrstu contrasts with nú:

• í fyrstu = at first
• nú = now

So the sentence is built around a clear time contrast: first one situation, now a different one.

Because í fyrstu is a fixed expression.

More literally, fyrstu is an inflected form of fyrstur (first), and it appears here after the preposition í. You do not need to analyze it every time you see it; the most useful approach is simply to learn í fyrstu as a chunk meaning at first.

A learner will also see fyrst by itself in other contexts, but in this sentence í fyrstu is the natural phrase.

Because the first clause is in the past, and the second is in the present.

The verb is skilja = to understand.

Here are the forms used:

• skildi = understood
• skil = understand

So:

• Í fyrstu skildi ég þetta ekki = first, I did not understand this
• en nú skil ég það = but now I understand it

This is because Icelandic normally follows a verb-second pattern in main clauses.

That means:

• the first slot can be an adverb or time expression, such as í fyrstu or nú
• the finite verb then comes second
• the subject comes after that

So:

• Í fyrstu
  • skildi
    • ég
• nú
  • skil
    • ég

This is completely normal Icelandic word order.

Yes. That is also correct.

The difference is mostly one of emphasis and style:

• Í fyrstu skildi ég þetta ekki... puts at first in the spotlight
• Ég skildi þetta ekki í fyrstu... starts more neutrally with I

Both are natural. Icelandic often moves time expressions to the front, especially when they help structure the sentence.

They are the direct objects of skilja, so they are in the accusative.

However, in the neuter singular, the nominative and accusative forms look the same, so you cannot see the case difference from the form alone.

Here:

• þetta = accusative neuter singular
• það = accusative neuter singular

This is a very natural Icelandic pattern.

• þetta means this
• það can mean that or it, depending on context

In the first clause, þetta points to the thing being talked about: this. In the second clause, that same thing has already been introduced, so Icelandic naturally refers back to it with það: it.

So the flow is roughly:

• first mention: this
• later reference: it

You could sometimes repeat þetta, but það sounds more natural here.

In this sentence, the most natural English equivalent is it.

But Icelandic það can cover both ideas:

• that
• it

The exact English translation depends on context. Here it is referring back to something already mentioned, so English usually says it.

Because Ég skil þetta ekki is the normal, neutral way to say I do not understand this.

If you said Ég skil ekki þetta, that would usually put stronger contrast on þetta, as if you meant:

• I don’t understand this (but maybe I understand something else)

So in your sentence:

• skildi ég þetta ekki is the ordinary, unmarked order

Yes, you often can, if the context already makes it clear what is being understood.

So:

• en nú skil ég það = more explicit
• en nú skil ég = more like but now I understand

Both can work. Including það makes the link to the earlier þetta especially clear.

It is regular enough that learners usually memorize its main forms early.

Useful forms are:

• skilja = to understand
• skil = I understand
• skilur = you understand / he understands / she understands
• skildi = understood
• skilið = understood (past participle)

So the sentence gives you a very useful contrast between present and past:

• skildi = did understand / understood
• skil = understand

That pattern is worth remembering because skilja is a very common verb.