Learn Icelandic: Ég skil það ekki. - I do not understand it.

The verb is skilja (to understand), which is a Group 3 verb. While these verbs end in -ur for you (þú skilur) and he, she, or it (hann skilur), the I form (ég) drops the ending completely. That is why it is just ég skil.

Where is the word for do in this sentence?

Icelandic does not use helper verbs like do or does to make negative sentences. You simply use the main verb (skil) and add the negative word (ekki).

Why does ekki come at the very end of the sentence?

In Icelandic, the word for not (ekki) usually comes after the verb and after the object (það). Instead of saying I do not understand it, the word order is literally I understand it not.

Is the word það in the accusative case here?

Yes! The verb skilja requires its object (the thing you understand) to be in the accusative case. Since það is a neuter pronoun, its accusative form looks exactly the same as its basic subject form.