Ova kancelarija je manja nego restoran.

Because kancelarija is a feminine singular noun, and the demonstrative ovaj / ova / ovo must agree with the noun.

• ovaj = masculine
• ova = feminine
• ovo = neuter

So:

• ova kancelarija = this office
• ovaj restoran = this restaurant
• ovo mesto = this place

It is in the nominative singular, because it is the subject of the sentence.

Basic structure:

• Ova kancelarija = subject
• je = is
• manja nego restoran = predicate with a comparison

So kancelarija is simply the thing being described.

Because manja has to agree with kancelarija, which is feminine singular.

The comparative adjective is learned in the masculine form manji = smaller, but it changes form depending on gender:

• masculine: manji
• feminine: manja
• neuter: manje

So:

• ovaj restoran je manji
• ova kancelarija je manja
• ovo skladište je manje

That is because it is irregular.

• mali = small
• manji / manja / manje = smaller

So you should learn mali → manji as a pair, just like English learners memorize good → better.

In a normal Serbian sentence like this, je is needed. It is the 3rd person singular present form of biti = to be.

So:

• Ova kancelarija je manja... = This office is smaller...

Unlike some other Slavic languages, Serbian usually does not omit the present-tense to be in ordinary sentences of this type.

Here nego means than.

After a comparative adjective such as manja (smaller), Serbian can use nego to introduce the thing being compared:

• manja nego restoran = smaller than the restaurant

In other contexts, nego can have other uses, but in this sentence its job is to mark the comparison.

Yes. In fact, that is often the easiest and most common pattern for learners to use with nouns.

You can say:

• Ova kancelarija je manja od restorana.

That also means This office is smaller than the restaurant.

A useful rule of thumb:

• od + genitive = very common with noun comparisons
• nego = also possible, especially in comparisons, but learners often find od more straightforward

Because this sentence uses nego, not od.

Compare:

• manja nego restoran
• manja od restorana

After od, the noun goes into the genitive, so restoran becomes restorana.

After nego, the noun often stays in the basic form used here.

Yes. That is a very important Serbian pattern.

Both the demonstrative and the adjective agree with the noun in gender and number:

• ova agrees with kancelarija
• manja agrees with kancelarija

Since kancelarija is feminine singular, both words appear in feminine singular forms.

Because Serbian does not have articles like English a/an/the.

Whether something is a restaurant or the restaurant is usually understood from context.

In this sentence:

• ova kancelarija already means this office, so it is clearly specific
• restoran can be understood from context as the restaurant or a restaurant, depending on the situation

It is understandable, but many speakers would probably find this version more natural:

• Ova kancelarija je manja od restorana.

That is because od + genitive is a very common, neutral way to make comparisons with nouns.

So the given sentence is grammatically understandable, but manja od restorana is often the more standard-sounding choice.