Learn Portuguese (Portugal): O gato bebe o leite ali.

Beber is a regular verb ending in -er. To find the 'he/she/it' form (which we use for o gato, the cat), you drop the -er ending and add -e. So, the stem beb- becomes bebe.

Leite ends in an 'e'. Why does it use the masculine word for 'the' (o)?

Words ending in 'e' can be tricky because they aren't predictably masculine or feminine just by looking at them. Leite (milk) happens to be a masculine word, which is why it uses o (o leite) instead of a. You just have to memorize its gender as you learn the word!

What exactly does ali mean here?

Ali means 'there' or 'over there'. In European Portuguese, ali is specifically used when the location is at a medium distance—usually a bit far from both the speaker and the listener, but still easily within sight.

How should I pronounce the word o in this sentence?

When o stands alone as the word for 'the', it is typically pronounced like the 'oo' in the English word 'boot', not like the English letter 'O'. You will hear this short 'oo' sound for both O gato and o leite.