Translation:I like watching gymnastics.
I say I like watching the gymnastics, the because its not just any gymnastics but the Olympic's one
"....the gymnastics event" (event belonging to Olympics) would be okay to use "the", otherwise generally "I like watching gymnastics" is fine.
This is a terrible sentence for Level 4. It's been repeating over and over in the prior levels so it's nothing new and not challenging. The kanji are remedial and since the kanji for taisou aren't being used, this really isn't appropriate for Level 4 since there's nothing new and nothing challenging compared to the previous levels which also had this exact sentence.