Learn Spanish (Latin America): Las amigas están charlando en la sala. - The friends are chatting in the living room.

It comes from the regular verb charlar (to chat). To talk about an action happening right now, you drop the -ar ending and add -ando. This forms the gerund (just like the "-ing" ending in English), so charlando means "chatting".

Why do we use están here instead of son? Both mean "they are", right?

Yes, both mean "they are", but they have different rules. When you want to say that someone is currently doing an action (the present continuous), you always use the verb estar paired with a gerund. So, están charlando means "they are chatting" right at this moment. You would never use ser (like son) for actions in progress.

Does las amigas mean that all the friends in this group are women?

Exactly! In Spanish, a group made up entirely of female friends is las amigas. If there was even one male friend in the group, it would change to the masculine plural, los amigos.

I see en la sala translates to "in the living room". Does en always mean "in"?

The preposition en is very flexible and can mean "in", "on", or "at" depending on the context. Here, because a living room (la sala) is an enclosed physical space, it naturally translates to "in".