Learn Italian: Buon compleanno! Questo regalo è per te. - Happy birthday! This gift is for you.

The word buono (good) drops its final -o when it comes right before a masculine singular noun starting with most consonants or a vowel. Since compleanno is masculine and starts with a 'c', we use buon.

Does Buon literally mean "happy" here?

No, buon literally means "good". Italians wish someone a "good birthday" rather than a "happy" one! You'll see this in other greetings too, like Buon anno (Happy New Year) or Buongiorno (Good morning).

Why do we use questo for "this"?

Words for "this" must match the gender and number of the noun they describe. Because regalo (gift) is a masculine singular noun, it takes the masculine singular form questo. If the noun were feminine, like festa (party), you would use questa.

Why does the sentence use te instead of tu for "you"?

When "you" comes immediately after a preposition like per (for), a (to), or con (with), you must use the pronoun te instead of the subject pronoun tu.