Learn Hardcore Swahili: Mimi ninaona tofauti kubwa katika mji huu.

You normally only need one of them, so Ninaona tofauti kubwa katika mji huu is perfectly correct.
Including Mimi adds emphasis or contrast, like “I (as opposed to others) see a big difference in this town.”

What does ninaona break down into, and does it mean “I see” or “I am seeing”?

Ninaona is made of three parts:

ni- = “I” (1st person singular subject marker)
-na- = present tense marker
-ona = verb root “see”

So ni-na-ona → ninaona.

In normal Swahili, ninaona can mean both:

“I see” (simple present, general truth: I see a difference)
“I am seeing” / “I’m noticing” (present progressive, right now)

Context decides which English tense is best.

Can kuona (and ninaona) also mean “to notice / to feel / to think,” not just “to see with the eyes”?

Yes. Kuona is wider than just physical seeing. Depending on context, it can mean:

to see: Ninaona nyumba – “I see the house.”
to notice / perceive: Ninaona tofauti kubwa – “I notice a big difference.”
to feel (emotion/physical): Ninaona uchungu – “I feel pain / I feel hurt.”
to think / consider (more informal): Mimi naona tufanye hivi – “I think we should do it like this.”

In Mimi ninaona tofauti kubwa katika mji huu, it’s very natural to understand it as “I notice / I can see a big difference in this town.”

Why is it tofauti kubwa and not kubwa tofauti like in English “big difference”?

In Swahili, adjectives usually follow the noun they describe:

English: big difference
Swahili: tofauti kubwa (literally “difference big”)

So:

“new car” → gari jipya
“old man” → mzee mzee (actually mzee mkubwa for “big/important elder,” but structure is same: noun + adjective)
“long road” → barabara ndefu

That’s why kubwa comes after tofauti.

Why doesn’t kubwa change form to agree with tofauti? I expected some prefix on the adjective.

Tofauti belongs to noun class 9/10 (often called the N class). In this class:

Many nouns don’t show a visible prefix (like tofauti, safari, habari).
Adjectives agree with the class, but often the agreement prefix is not clearly visible with some adjectives.

With kubwa, the agreement is “silent” here. You just say tofauti kubwa, not tofauti nkubwa or something similar.
Compare:

mtoto mkubwa – big child (class 1)
watoto wakubwa – big children (class 2)
tofauti kubwa – big difference (class 9/10; form of kubwa looks the same)

So the adjective is agreeing, but in this class it happens without a new piece you can “see.”

Why is it katika mji huu? Could I also say kwenye mji huu or ndani ya mji huu?

All three can be used, but they have slightly different flavours:

katika mji huu – neutral “in this town,” common in written/neutral speech.
kwenye mji huu – very common in everyday speech; also “in / at / on this town,” quite flexible.
ndani ya mji huu – literally “inside this town,” emphasising being inside the bounds of the town.

In your sentence, katika mji huu and kwenye mji huu are interchangeable for most purposes. Ndani ya mji huu feels a bit more like stressing the “inside” aspect.

Why is it mji huu and not huu mji, like English “this town”?

In standard Swahili, demonstratives (this/that) normally follow the noun they modify:

mji huu – this town
mji ule – that town (far)
mji huo – that town (already mentioned / near the listener)

So the pattern is generally:

noun + demonstrative

Putting huu before the noun (huu mji) is not standard for this form; learners should stick to mji huu.

What’s the difference between mji, jiji, and kijiji? Would any of them work here?

These three are related but not identical:

mji – town, or sometimes “city” in a general sense
jiji – large city, especially a big urban centre (Dar es Salaam, Nairobi, etc.)
kijiji – village

In your sentence:

tofauti kubwa katika mji huu – a big difference in this town
tofauti kubwa katika jiji hili – a big difference in this city
tofauti kubwa katika kijiji hiki – a big difference in this village

So you choose based on the size/feel of the place you’re talking about.

Can I drop katika mji huu and just say Mimi ninaona tofauti kubwa?

Yes. If you say only Mimi ninaona tofauti kubwa, the sentence is still complete and grammatical. It simply means:

“I see a big difference” (without saying where).

Adding katika mji huu specifies the location of that difference: “in this town.”

Is the word order inside katika mji huu fixed? Can I say katika huu mji instead?

The natural, standard order is:

katika + noun + demonstrative
katika mji huu

Saying katika huu mji is not standard; demonstratives like huu normally come after the noun they modify.
So you should say:

katika mji huu – correct
kwenye mji huu – correct
katika huu mji – unnatural / wrong in standard Swahili

How would this sentence change for other subjects like “you,” “he/she,” “we,” “they”?

The structure stays the same; only the subject marking (and optionally the pronoun) changes. Using the same rest of the sentence:

Mimi ninaona tofauti kubwa katika mji huu. – I see a big difference …
Wewe unaona tofauti kubwa katika mji huu. – You (sg.) see a big difference …
Yeye anaona tofauti kubwa katika mji huu. – He/She sees a big difference …
Sisi tunaona tofauti kubwa katika mji huu. – We see a big difference …
Ninyi mnaona tofauti kubwa katika mji huu. – You (pl.) see a big difference …
Wao wanaona tofauti kubwa katika mji huu. – They see a big difference …

Notice how the verb prefixes change: ni-, u-, a-, tu-, m-, wa-.

How do I say the same idea in past or future instead of present?

You keep the same structure and change the tense marker:

Present: ninaona – I see / I am seeing
Past: nili
- ona → niliiona? Careful: no, the simple: nili-ona → niliiona if object “it” included. For simplicity, just niliona.
Future: nita-ona → nitaona

So:

Mimi niliona tofauti kubwa katika mji huu. – I saw / I noticed a big difference in this town.
Mimi nitaona tofauti kubwa katika mji huu. – I will see / I will notice a big difference in this town.

You can also drop Mimi if it’s clear from context:

Niliona tofauti kubwa katika mji huu.
Nitaona tofauti kubwa katika mji huu.