La palabra significa «daño».

Because Spanish usually uses the definite article when referring to a specific thing already known in context.
So la palabra means the word.

In a sentence like this, you are typically talking about one particular word that has already been mentioned, so la sounds natural.

Palabra is a feminine noun in Spanish, so it takes la, not el.

This is a grammatical gender point:

• la palabra
• una palabra

Its gender does not mean the word is “female” in any real-world sense; it is just part of Spanish grammar.

Significa is the third-person singular present tense of the verb significar.

So it agrees with the subject la palabra:

• la palabra significa = the word means

Other forms would be:

• yo significo
• tú significas
• él / ella / la palabra significa
• nosotros significamos

In this sentence, significa means means.

Yes, very often.

Both can be used to explain meaning:

• La palabra significa daño.
• La palabra quiere decir daño.

In everyday Spanish, querer decir is extremely common when explaining what something means.
Significar can sound a little more formal or dictionary-like, but it is completely natural here.

Because « » are Spanish-style quotation marks, often called angle quotes or guillemets.

In Spain, these are a standard and very common way to mark quoted words or expressions:

• «daño»

You may also see:

• "daño"

Both are understandable, but « » are especially traditional and standard in Spanish publishing.

Because here daño is being mentioned as a word, not used as a noun inside the sentence in the usual way.

When you cite a word as a word, Spanish often leaves out the article:

• La palabra significa «daño».

If you were using the noun normally, you would usually say:

• el daño
• un daño

So here, daño is not functioning as “the damage” in the sentence; it is the quoted lexical item being identified.

A good approximation is DAH-nyo.

The key part is ñ, which is a separate Spanish letter. It sounds like:

• the ny in canyon for many English speakers

So:

• daño ≈ DAH-nyo

Try not to pronounce it like a plain n:

• dano would be different from daño

No. Ñ is a separate letter in Spanish, not just n with a stress mark.

Important distinction:

• á, é, í, ó, ú = vowels with an accent mark
• ñ = a different letter from n

So:

• ano and año are different words
• dano and daño would also be different

The mark over ñ is called a tilde, and it changes the sound.

The subject is la palabra.

That is the thing doing the verb:

• La palabra = subject
• significa = verb
• «daño» = the meaning being given

So structurally, it is:

[Subject] + [Verb] + [Quoted word]

Yes, very close.

Spanish here follows a straightforward pattern:

• La palabra = the word
• significa = means
• «daño» = damage / harm as a cited word

So the order is basically:

• The word means “damage.”

This is one reason the sentence is quite easy for English speakers to process.

Usually in sentences like this, yes.

But depending on context, significar can also be closer to:

• to signify
• to represent
• to imply
• to be important / to matter in some structures

For example:

• Esta señal significa peligro. = This sign means danger.
• Eso significa mucho para mí. = That means a lot to me.

So in your sentence, means is the natural interpretation, but the verb is a bit broader than just one English use.

Because that is normal punctuation for a complete sentence.

The quoted word «daño» is part of the sentence, and the sentence ends after it, so the period comes at the end:

• La palabra significa «daño».

This is standard Spanish punctuation.