Learn Spanish (Spain): No, no es difícil.

The first no simply means "no," answering a question. The second no is the one that makes the verb negative. In Spanish, you make a verb negative by putting no directly in front of it. So, no es means "it is not." Seeing a double no like this is extremely common in Spanish replies.

Where is the word for "it" in this sentence?

Spanish usually drops subject pronouns (the equivalents of I, you, he, she, it) because the verb form already tells you who or what the subject is. There is no specific word for "it" used as a subject here; the verb es by itself translates to "it is."

Why do we use es instead of está for "it is"?

We use es (from the verb ser) because being difficult is a defining characteristic of the thing we are talking about. You use ser for descriptions and traits, whereas you use estar for temporary conditions, feelings, or locations.

Does the word difícil change depending on whether "it" is a masculine or feminine thing?

No! Adjectives that end in a consonant, like difícil, have the exact same form for both masculine and feminine nouns. However, if you were talking about multiple difficult things, you would add -es to make it plural: difíciles.