Learn Icelandic: Jæja! Nú borðum við.

Icelandic follows the verb-second (V2) rule. Because the main part of the sentence starts with the adverb Nú (now), the verb borðum must be the second piece of information. This pushes the subject við (we) to the third position.

Is Jæja just a direct translation of "well then"?

Not exactly, it is much more versatile! Jæja is one of the most common words in Icelandic. Depending on your tone of voice, it can mean "well then," "alright," express impatience, or act as a sigh of acceptance. Here, it is an energetic "Alright!" to signal a transition to a new activity.

Does borðum mean "we eat" or "we are eating"?

It covers both. Icelandic does not have a separate continuous tense like the English "-ing" form. Because of this, borðum translates to both "eat" and "are eating." In this context, it can even imply the immediate future, like saying "we are going to eat now.".