Hun er favoritten.

Because -en is the definite ending for a masculine noun in Norwegian.

• en favoritt = a favorite
• favoritten = the favorite

So Hun er favoritten literally means She is the favorite.

In Norwegian, it is very common to add the definite article to the end of the noun instead of using a separate word like English the.

Yes, in this sentence it is treated as a masculine noun:

• en favoritt
• favoritten

In Bokmål, many nouns can also be used as common gender patterns depending on usage, but en favoritt / favoritten is the standard form learners will usually meet.

Hun is the standard Bokmål form for she.

• hun = Bokmål
• ho = common in Nynorsk and also heard in some dialects

So if you are learning Bokmål, Hun er favoritten is the expected form.

Er is the present tense of å være, which means to be.

So:

• jeg er = I am
• du er = you are
• hun er = she is

In this sentence, er simply means is.

This is the normal Norwegian word order for a basic statement:

subject + verb + complement

So:

• Hun = subject
• er = verb
• favoritten = subject complement

This works just like English She is the favorite.

Yes, but the meaning changes.

• Hun er favoritten = She is the favorite
  This suggests one specific favorite, the top choice.
• Hun er en favoritt = She is a favorite
  This means she is one of the favorites, not necessarily the single favorite.

So the definite form favoritten is important for the meaning.

Yes. That means She is my favorite.

Compare:

• Hun er favoritten = She is the favorite
• Hun er min favoritt = She is my favorite

In min favoritt, the possessive min makes the noun definite in meaning, so you do not add -en:

• min favoritt, not min favoritten

Here it is a noun.

In English, favorite can sometimes feel adjective-like, but in Norwegian favoritt is very commonly used as a noun:

• Han er favoritten. = He is the favorite.
• Dette er min favoritt. = This is my favorite.

Norwegian often uses it exactly like a noun meaning favorite person/thing.

A simple learner-friendly approximation is:

hoon ehr fah-vo-REET-en

A few notes:

• Hun has a rounded vowel that may be a bit different from English oo
• er is pronounced more lightly than English air
• favoritten has the main stress on ritt

Pronunciation varies a bit by dialect, but this approximation is a good start.

Yes, it is natural and correct.

It would be used when talking about a competition, a group, a ranking, or someone clearly seen as the preferred choice. For example:

• in a contest
• in a sports tournament
• in a discussion of who people like best

So Hun er favoritten is a normal and idiomatic Norwegian sentence.