Хоть пунктуация и кажется мелочью, без неё текст читается хуже.

Here хоть means although / even if / while it may be true that.

In this sentence, хоть ... и ... introduces a contrast:

• Хоть пунктуация и кажется мелочью...
  = Although punctuation seems like a small thing...

So this is not the хоть meaning at least or even by itself. It is part of a concessive pattern: хоть X и Y = although X, Y.

This и is part of the fixed concessive pattern хоть ... и ....

It does not mean the normal and here. Instead, it helps form the meaning although / even though:

• Хоть пунктуация и кажется мелочью, ...
• Хотя пунктуация кажется мелочью, ...

These are very close in meaning.

You will often see this structure:

• Хоть он и устал, он продолжал работать.
  Although he was tired, he kept working.

So in your sentence, и is not being translated separately; it is just part of the pattern.

Very close, yes.

Your sentence could also be written as:

• Хотя пунктуация кажется мелочью, без неё текст читается хуже.

Both mean essentially the same thing: Although punctuation seems like a minor thing, without it the text is harder to read.

A rough difference:

• хотя is the more straightforward although
• хоть ... и ... can sound a little more emphatic or conversational in some contexts

But for a learner, the main thing is: they are very similar and often interchangeable.

Because казаться often takes the complement in the instrumental case.

So:

• мелочь = nominative
• мелочью = instrumental

The pattern is:

• казаться кем? чем? = to seem to be what?

Examples:

• Он кажется странным. = He seems strange.
• Это кажется ошибкой. = This seems like a mistake.
• Пунктуация кажется мелочью. = Punctuation seems like a small thing / triviality.

So мелочью is instrumental singular of мелочь.

Мелочь literally means something small, minor, insignificant, trivial.

In this sentence, кажется мелочью means:

• seems like a trivial thing
• seems unimportant
• seems like a small detail

So it is not about physical size. It is about importance.

After без you need the genitive case.

The pronoun она changes like this:

• nominative: она
• genitive: её / неё

After a preposition, Russian commonly uses the form with initial н-:

• без неё = without her / without it
• у неё = by her / she has
• для неё = for her

Here неё refers to пунктуация, which is feminine.

So:

• без неё = without it
  literally, without her, because пунктуация is a feminine noun in Russian

This is a standard Russian rule: after many prepositions, third-person pronouns gain an initial н.

Compare:

• я вижу её = I see her
• без неё = without her
• у него = with him / he has
• для них = for them

So the н is not optional here in normal standard Russian. After без, you say без неё, not без её.

Читается here means something like:

• is read
• reads
• is readable
• comes across when reading

In sentences like this, Russian often uses a reflexive verb to express how easy or difficult something is to read, say, write, remember, etc.

So:

• текст читается хорошо = the text reads well
• текст читается легко = the text is easy to read
• текст читается хуже = the text reads worse / is harder to read

This is very natural in Russian. It does not mean the text is literally reading itself in a silly sense. It is more like a middle/passive-style construction.

Because хуже is the comparative form: worse.

The sentence is making a comparison:

• with punctuation, the text reads better
• without punctuation, it reads worse

So:

• плохо = badly
• хуже = worse

That is why хуже fits better here.

You could think of the implied comparison as:

• Без неё текст читается хуже, чем с ней.
  Without it, the text is read worse than with it.

In natural English, we would usually say is harder to read or reads worse.

Because the first part is a subordinate concessive clause:

• Хоть пунктуация и кажется мелочью = although punctuation seems minor
• без неё текст читается хуже = without it, the text is harder to read

Russian separates these clauses with a comma, just as English often does with although clauses.

So the comma marks the boundary between:

1. the concessive idea: although...
2. the main statement: the text reads worse without it

Yes, Russian word order is flexible, though some versions sound more natural than others.

The original:

• Хоть пунктуация и кажется мелочью, без неё текст читается хуже.

Possible variations:

• Хотя пунктуация кажется мелочью, без неё текст читается хуже.
• Без неё текст читается хуже, хоть пунктуация и кажется мелочью.

The original order is very natural because it presents the concession first, then the main point.

Also, без неё is placed early in the second clause because it sets up the condition clearly: without it.

Because пунктуация is normally an uncountable noun, like punctuation in English.

So Russian usually says:

• Пунктуация важна. = Punctuation is important.
• Без пунктуации трудно читать. = Without punctuation, it is hard to read.

You would not normally use a plural here to mean punctuation marks in general.

Grammatically, that is close, but it sounds unnatural in English.

A more natural English rendering would be:

• Without punctuation, the text is harder to read.
• Without it, the text reads worse.

So yes, читается хуже is structurally somewhat like is read worse, but idiomatic English usually prefers is harder to read.

There are three very useful patterns here:

1. хоть ... и ... = although / even though

   • Хоть он и молод, он очень опытный.

2. казаться + instrumental = to seem like

   • Это кажется проблемой.
   • Она кажется странной.

3. [something] читается + adverb = [something] reads / is easy or hard to read

   • Книга читается легко.
   • Статья читается тяжело.

This sentence is a great example because it combines all three in a very natural way.