Translation:She eats chicken but does not eat fish.
Duolingo's set of translations is not complete: just report your correct translation through the 'report' button and it should be added.
For some reason DL is really bad at this. The formal you is sometimes capitalised 'Lei' but this is not required so you are correct.
I am not an expert Italian speaker but I noticed last time that I was in Italy that people in shops generally referred to me as 'Lei', so it is still in common use. I used 'Lei' in return.
I was told that older strangers can be offended if intially addressed as 'tu'. DL seems to treat the formal 'you' as archaic, like the English 'thou'.
Guys this new edition of the voice recognition software really sucks. It used to not recognize simple sounds but now it's blanking on whole multi-syllable words. I repeat, whatever the changes in the last couple of days, they have made things in the voice recognition world much, much worse.