Translation:This is the tallest building in the city.
I wr "'tote This is the tallest building in town
Which is what one would actually say.
t was marked wrong because I didn't write 'the town'
I think this needs correcting to accept the answer without the "the"'
in English we would always use the with a superlative like tallest. If there were several very tall buildings in town, and you wanted to indicate that a building was one of them, you would say "one of the tallest buildings in town".
Здание seems plural, but means (one) building. Where does this word come from? Is there some word like 'здань' or whatever that could mean individual flat, or something like that? Is there some logic behind this word's ending '-еи' (typical for plurals)?
The word ends in -ие, not -еи. Russian plurals do not end in -е (save for indeclinable words which end in the same thing in all forms).
It is a fairly typical nominalisation (build→a building). The verb it is base off is, however, not in use anymore. Other such nouns include решение "decision", задание "task, assignment", занятие "occupation", мнение "opinion".