По сравнению с пончиком ватрушка не такая сладкая, зато кекс кажется сытнее.

It means compared with or in comparison with.

So По сравнению с пончиком means Compared with a doughnut / In comparison with a doughnut.

This phrase sets up the standard of comparison for what follows.

Because по сравнению с requires the noun after с to be in the instrumental case.

• пончик = nominative
• пончиком = instrumental

So:

• по сравнению с пончиком = compared with a doughnut

This is a fixed and very common pattern in Russian.

In Russian, the verb to be is normally omitted in the present tense.

So:

• ватрушка не такая сладкая literally looks like the vatrushka not so sweet
• but naturally means the vatrushka is not as sweet

This is completely normal Russian grammar.

They agree with ватрушка, which is a feminine singular noun.

So the sentence uses feminine singular forms:

• такая = feminine singular of такой
• сладкая = feminine singular of сладкий

If the noun were masculine, you would get:

• пончик не такой сладкий

If it were plural:

• пирожки не такие сладкие

No. Не такая сладкая means not as sweet or not so sweet, not simply not sweet.

Compare:

• не сладкая = not sweet
• не такая сладкая = not as sweet

So the speaker is making a comparison, not denying sweetness altogether.

Because the comparison has already been introduced by По сравнению с пончиком.

Russian often expresses comparison in either of these ways:

• Ватрушка не такая сладкая, как пончик.
  = The vatrushka is not as sweet as the doughnut.

• По сравнению с пончиком ватрушка не такая сладкая.
  = Compared with the doughnut, the vatrushka is not as sweet.

Both are natural. The version in your sentence uses the second pattern.

Зато introduces a contrast, often meaning something like:

• but
• whereas
• on the other hand
• but in return
• the good side is that

Here it means that although the vatrushka is less sweet, there is a compensating point:

• зато кекс кажется сытнее
  = but the cake/muffin seems more filling

So зато often signals a drawback in one respect, but an advantage in another.

Кажется means seems.

So:

• кекс кажется сытнее = the cake/muffin seems more filling

The subject is кекс, and сытнее describes how it seems.

You can also add who it seems that way to:

• Мне кекс кажется сытнее.
  = The cake seems more filling to me.

Without мне, the sentence is more general.

Сытнее is the comparative form of сытный, which means filling, substantial, or satisfying.

So:

• сытный = filling
• сытнее = more filling

This is a common short comparative form in Russian.

A longer alternative is:

• более сытный = more filling

But сытнее sounds very natural and compact.

Because зато is a coordinating conjunction joining two clauses, and Russian normally puts a comma before it.

The two parts are:

• По сравнению с пончиком ватрушка не такая сладкая
• зато кекс кажется сытнее

So the comma marks the contrast between the two ideas.

Yes, it is natural.

Russian word order is flexible, and placing По сравнению с пончиком first helps set the context right away: compared to the doughnut...

So the sentence is structured like this:

• comparison frame first: По сравнению с пончиком
• first statement: ватрушка не такая сладкая
• contrasting statement: зато кекс кажется сытнее

This order sounds smooth and emphasizes the comparison from the start.