"The beautiful shirts of the children are too small for them."
Translation:חולצותיהם היפות של הילדים יותר מדי קטנות עליהם.
Well, a lot of times, some phrases seem weird, incorrect, redundant but don't forget that every language has its own rules and we cannot look at the rules of a different language through the rules of our own language. Both versions Larry wrote are correct. "too small" can be translated in two ways. If they are not accepted, it means they didn't add it to the possible correct answers.
DL introduces us to an important feature of Hebrew--the redundant or anticipatory pronoun. It's common to Semitic languages (Arabic, Aramaic, Syriac) and is found in late classical Hebrew (Can 3:7). It was common in rabbinic Hebrew. Thus, when Hebrew was being revived, it would be odd to not have it be a feature of modern Hebrew. It's good to get used to it out of respect for the deep tradition and to be able to spot it when you see or hear it. E.g., אמה של הילדה, "the mother of the girl." And yet, you will be understood if you skip the redundant pronoun.
Anticipatory pronoun is not strange to Semitic languages, but it is odd to many European languages. Having said that, Spanish has something somewhat analogous with the indirect object pronoun construction and modern Greek has both proleptic (anticipatory) and resumptive pronouns.
I had the word order different, placing "too" after the "small", as in "חולצותיהם היפות של הילדים קטנות יותר מדי עליהם" This was marked wrong, but I didn't realize there was a specificity to word order for adjectives. Perhaps it's just a case where they haven't yet included such a variation into the application?
Recall that in a construct chain, the absolute noun takes the def art., as in עבד המלך, "the servant of the king," i.e., the king's servant." So here the def art is with הילדים and the word for shirts is "their shirts" with anticipatory pronoun (about which see comments above), lit. "Their beautiful shirts of the children."