Learn Spanish (Latin America): Amigo, tú vives en México.

The speaker is talking to a friend (amigo). In Spanish, tú is the informal "you" used for friends, family, people your own age, and children. If the speaker were talking to a stranger, a boss, or an elder, they would use the formal "you," which is usted.

How would the verb change if we used the formal usted?

If you used usted to be formal, the verb vivir (to live) would change to vive. The formal sentence would be: Usted vive en México. The -es ending in vives always goes specifically with the informal tú.

Do I actually need to include the word tú in this sentence?

No, it is optional! In Spanish, the verb ending usually tells you who is doing the action. Because vives can only mean "you live" (informal), you can simply say Amigo, vives en México. Including tú just adds a little extra emphasis to the "you".

Why does tú have an accent mark over the 'u'?

The accent mark helps tell two identical-sounding words apart in writing. Tú (with the accent) means the person "you". Without the accent, tu means "your" (as in tu amigo, meaning "your friend").