Learn Russian: В июле мы отдыхаем.

When you want to say in a specific month, Russian uses the preposition в followed by a grammar form called the Prepositional case. The dictionary word for July is июль. To make it Prepositional, you replace the soft sign (ь) at the end with the letter -е, giving you в июле.

Does отдыхаем just mean resting at home, like taking a nap?

It can mean simply relaxing or resting, but in the context of months, seasons, or travel, отдыхать usually means to go on vacation or take a holiday. So here, it implies taking time off work or school for the month.

How do you form the verb отдыхаем from its dictionary form?

The dictionary form is отдыхать. Because the subject of the sentence is мы (we), you drop the -ть from the end and add the standard 'we' ending -ем to make отдыхаем.

Is it okay to change the word order and say Мы отдыхаем в июле?

Yes! Russian word order is very flexible. Saying Мы отдыхаем в июле is perfectly correct and sounds very natural. Putting В июле at the start of the sentence just places a little extra emphasis on when the vacation is happening.