Learn Hardcore Polish: Jem kolację w kuchni. - I eat dinner in the kitchen.

Jeść is the infinitive (to eat). Jem is the 1st person singular present tense form (I eat / I am eating).
Conjugation (present tense) of jeść:

(ja) jem – I eat
(ty) jesz – you eat
(on/ona/ono) je – he/she/it eats
(my) jemy – we eat
(wy) jecie – you (pl.) eat
(oni/one) jedzą – they eat

Does Jem kolację mean I eat dinner or I am eating dinner?

Both. Polish present tense commonly covers both habitual and “right now” meanings, and context decides:

With no extra context, Jem kolację is often understood as I’m eating dinner (now).
For habitual meaning (I eat dinner [regularly]), you might also hear Jadam kolację (more clearly habitual).

Why is kolacja changed to kolację?

Because it’s the direct object of jem (I eat [what?]), so it takes the accusative case.
For feminine nouns ending in -a, the accusative singular usually changes:

kolacja (nominative: “dinner” as a subject)