Learn Portuguese (Portugal): Eles estão em Londres.

We use estão (from the verb estar) because it describes a location. In Portuguese, stating where someone or something is physically located always uses estar, even if they are in a permanent place like a city. You would use são (from ser) to talk about where someone is from, rather than where they are right now.

Who exactly does eles refer to?

Eles means "they". It can refer to a group of men, or a mixed group of men and women. If the group was entirely female, you would use elas instead.

Why is the word for "in" just em here? Don't we usually use no or na?

No and na are combinations of em plus the word for "the" (o or a). Most cities, including Londres (London), don't use a "the" before their names in Portuguese. Since there is no "the" to combine with, we just use the basic preposition em.

How do I pronounce the -ão in estão?

The -ão is a nasal sound. It sounds a bit like the English sound "ow", but spoken through your nose. You will hear this ending very often, as it is the standard ending for most "they" form verbs in the present tense!