Learn Italian: In vacanza ci si rilassa e ci si diverte. - On vacation, one relaxes and has fun.

The verbs rilassarsi (to relax) and divertirsi (to have fun) are reflexive, meaning they already use the pronoun si. When you want to make a reflexive verb impersonal ("one relaxes"), you would technically end up with si si. To avoid this repetitive sound, Italian changes the first si to ci, creating ci si.

Does the ci in ci si mean "us" or "there" in this sentence?

Neither! Even though ci usually means "us" or "there", in the combination ci si it is just a substitute for a second si. It doesn't add any extra meaning to the sentence; it is purely a placeholder to make the phrase easier to say.

Why are rilassa and diverte in the "he/she/it" (third-person singular) form?

The impersonal subject (represented by si or ci si) translates to "one" or "people in general." In Italian, unless it is followed by a plural direct object, this structure always requires the third-person singular form of the verb, just like the English "one relaxes."

Why is it in vacanza without an article, rather than nella vacanza?