Translation:My sister is reading this book even though she does not understand it.
The "и" kinda serves the function of the subject here (сестра). Since the subject is already named in the first clause, it would almost default to "она", but because the direct object (the book) is also feminine, it sounds confusing (она не понимает ее), so they just put the и there. You'd be fine to say "хотя она не понимает ее", but it's just as good to name one of those since they're the same gender (either "хотя она не понимает книгу" or "хотя сестра не понимает ее").
In Russian, there is no difference - Она читает is "she reads" and "she is reading", but depending on context it will of course change in English. I think they want "is doing something" here since we're talking about how the sister is reading one specific book; that sounds like an event that's ongoing, not habitual. I think if it was just "она читает книги", then "she reads books" would be more appropriate.
I don't know, just how it sounds to me.