When speaking about siblings, the verb is singular but parents it's plural? Why, Polish, why?
Well, "rodzice" are a simple noun, it's "rodzeństwo" that is special, being neuter and singular, like a mass noun.
Would it change to "wasze rodzice" if you had to female parents?
So you mean two moms? Or rather at least four moms, because "wasze" refers to more than one person? No, not really. Either still "wasi rodzice", but more probably "wasze mamy", so exactly "your moms".
Obiad means dinner, not lunch.
That's right. We don't rather use word "lunch" in polish. Something similar to lunch is second breakfast - drugie śniadanie.
Why is "wasze rodzice" incorrect? Hypothetically i could be asking a group of people about their parents and thus use the plural "you"?
There are two plural categories in Polish. Since rodzice belongs to the masculine personal (virile) category, it must be wasi.
Why is it Jedza instead of jem?
Because "jem" means "I eat/I am eating", and "jedzą" means "they eat/they are eating", so it's the right form here.
państwo rodzice jedzą obiad
In order to use formal pronouns as possessives, they must be inflected for the genitive case:
Państwa rodzice jedzą obiad.