Learn Icelandic: Það er erfitt að hæfa skotmarkið í bogaíþróttinni. - It is difficult to hit the target in archery.

Yes, here it takes the accusative case. When hæfa means 'to hit a target', it governs the accusative, which is why we see the accusative neuter form skotmarkið. However, be careful: when hæfa is used to mean 'to suit' or 'to befit' (like saying clothes suit someone), it governs the dative case instead.

English just says 'in archery'. Why does Icelandic use the definite article in í bogaíþróttinni?

In Icelandic, broad concepts, academic subjects, and specific sports usually take the definite article, whereas English typically leaves them bare. So instead of just saying 'in archery', Icelandic naturally phrases it as 'in the archery sport'.

How do you break down the compound word bogaíþróttinni?

It is made up of bogi (a bow) and íþrótt (a sport). It ends with -inni, which is the feminine singular dative definite article. It is in the dative case because the preposition í governs the dative when referring to a state, position, or being involved in a general field of activity.

Why does the sentence start with Það? Is it pointing to a specific object?

No, here Það acts as a dummy pronoun, much like the 'It' in the English translation 'It is difficult...'. It simply fills the mandatory subject position for the neuter adjective erfitt, setting up the true focus of the sentence: the infinitive phrase að hæfa skotmarkið.