I wrote, "Er ist ous der Schusel" obviously wrong, and it came up as Correct, Pay attention to the umlauts". I've come to the conclusion that the program needs some tweeking. Sometimes I'll spell a German word wrong and the program lets it pass. However if I misspell an English word, I automatically lose a heart!
Yes it may let you pass with a simple typo. It should tell you if you have a typo and it lets you pass through. I guess it's a little harder on you in your native language? Doesn't quite seem fair, but I'm glad it can recognize a typo from an error from misunderstanding (usually) :-).
The dative form would be der. For example. "He is eating noodles out of the bowl". He is the nominative, noodles/Nudeln would be the direct object/accusative, and bowl/Schüssel is the indirect object/dative. The only reason it isn't the direct object is the person isn't eating the bowl. What makes it confusing is it doesn't mention the subject eating a specific noun. It couldn't be den Schüssel anyway because it is feminine and and it would only be den if there were more bowls.
The prepositions don't translate one-to-one. In some contexts "from" should be "aus" and in other "von" or "ab". Similarly, "aus" can be "from", "out", "of", or even "off". And, of course, to thoroughly confuse things, "off" can be "weg" or "ab", in addition to "aus".
This is why computers and machine translations sometimes suck.
The good news is, when the machines rise up, the salvation of the human race will be found in confusing the robots by switching from language to language. Not dissimilar to how the U.S. Army employed Code Talkers in WWI and WWII.
Die Eule is rather forgiving about misunderstandings due to isst and ist being homophones, particularly when answering a "type what you hear" question. I suppose the thought with this particular sentence is that if he is not IN the bowl, then he is out of the bowl. (Although it does seem, based on usage such as Der Stuhl ist aus Holz that the ist usage could be interpreted as "He is composed of the bowl", but that's just silly.)