"Their skirt is yellow."
Translation:Ihr Rock ist gelb.
here, "ihr" is not the nominative plural of "you", but the possessive form of sie: "their" . They are written and pronounced the same way but it's important to keep in mind that they are different words.
And ist here conjugates with the noun "ihr Rock" = their skirt
Btw the ich form of sein is not ist, but bin: "ich bin"
I guess Duolingo's example is talking about multiple people owning a singular skirt. Okay. However in English this sentence could be used to talk about a singular person of non-specific gender. For example: "I can see someone, but not clearly. Their skirt is yellow". Yes, I know that a skirt is often thought of as a feminine item of clothing, but grammatically how would I say this in German? Do I need to choose a gendered possessive determiner?
Alright, so at best to capture this meaning from English it'd be something that presumes no biological gender but uses a word with a fixed grammatical gender, like Ich sehe jemanden, aber nicht klar. Sein Rock ist gelb or Ich sehe eine Person, aber nicht klar. Ihr Rock ist gelb in which the possessive determiner refers to the impersonal pronoun/noun (and as I understand it, either of these sentences could be used for someone of any gender, even if known)?
I suppose so. (By the way, deutlich would be better than klar here, I think.)
But it will break down in other situations, such as talking about a friend -- ein Freund is going to have most people assume a male friend, rather than understanding it as a "generic masculine" -- and eine mit mir befreundete Person would be gender-neutral but a bit of a mouthful.