Translation:They live there.
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"lì" and "là" both mean "there". The difference is subtle, but generally "lì" is a little bit nearer to the speaker than "là". "là" might better be translated as "over there". There's a nice discussion here: http://forum.wordreference.com/showthread.php?t=8106
Some time after I posted this I asked my Italian teacher (a native) about this. She says there is no difference, but you'd use whichever sounds better (kind of like tra and fra). As she explains it, you would not say, for instance "La donna è lì e l'uomo è lì." to say "The woman is there [by the door, say] and the man is there [by the window]". The repeated "lì" just sounds weird. You'd say "La donna è lì e l'uomo è là." OR "La donna è là e l'uomo è lì." In English, you'd probably also distinguish between the two uses of "there": "The woman is there and the man is over there." This led to my confusion earlier.
In Portuguese and Spanish we have almost the same words,that describe three diffent location,referring to the position of the speaker(closer to farther):
To make it easier to understand in English I would suggest thinking in a way similar to This and That,as the fellow learner mentioned before.