- здесь = in this place (answers the question «где?»),
- сюда = to this place (answers the question «куда?»).
I know that you asked this two years ago, but in case this is still of any help to you or a future reader, here goes: The word order of your English is almost perfect but not acceptable to Duolingo.
English is almost always in the Subject-Verb-Object order. Your verb (will) should come after the subject. (We.) As a question, one could ask "Will we put the couch here?" Though that is an exception.
With that said, English has more exceptions than rules, and you could have an Object-Verb-Subject with the word "here." (If you're showing a guest around your house, you could say "Here is the bathroom, and here is your bedroom." Or, at a store, your cashier will say "Here's your change.")
"And here's where we will put the couch" translates as
А здесь, это где мы поставим диван. Or,
А сюда, это куда мы поставим диван. It comes across as laborious and inefficient in the Russian - too many words.
This is a Russian course, not English, so it's not about how common or proper the English translation is, as long as the Russian sentence is understood. Many Russian/English translations do not translate directly.
Also as a native speaker, "And here we will put the couch." sounds perfectly natural. That's not to say your wording is incorrect English; it's fine. I agree that any sentence that shows correct understanding of the Russian could potentially be allowed, but as Vadim points out, there is no "where" in the Russian.