Learn Icelandic: Við sjáum fugl hjá stóru eldfjalli.

They come right after the preposition hjá (by/next to). In Icelandic, hjá always forces the following noun and its describing adjectives into the dative case.

Why does the adjective stóru end in -u?

The adjective stór (big) has to match the neuter dative noun eldfjall. For strong adjectives in the dative singular, neuter words take the -u ending, while masculine takes -um and feminine takes -ri.

Where does the -i at the end of eldfjalli come from?

It is the dative singular ending for the neuter noun eldfjall (volcano). Many neuter nouns add an -i in the dative case, just like fjall (mountain) becomes fjalli and land becomes landi.

Since fugl is the object of the verb, why doesn't it have a special ending?

fugl (bird) is indeed in the accusative case because it is the direct object of the verb sjáum (we see). However, for strong masculine nouns like fugl, the accusative form looks exactly the same as the base dictionary form.