The meaning is similar, but it's grammatically too different. In the German sentence, spiele is a verb but in your English sentence "playing guitar" is used as a noun. The German sentence also uses gut as an adverb but in your sentence "good" is an adjective.
The best translations (at least on Duolingo) will keep the grammar as well as the meaning intact where it is sensible to do so, and it is here.
It's a general statement.
For something that is happening right now, I don't think you can use that word order and emphasis -- it would be more along the lines of Ich spiele (gerade) relativ gut (die) Gitarre, but not with article-less Gitarre at the beginning: that's more for when the topic of "guitar playing" (in general) and you are saying how good you are at it.
To me, this is a wierd sentence structure. I don't know why, but it doesn't feel right. I am not a native, but I have been learning german for very long. This sounds absurd enough that I was surprised over this being an acceptable sentence. I would've thought that "Ich spiele Gitarre relativ gut" or "Ich spiele relativ gut Gitarre" should've been far more appropriate since the subject usually appears first in the sentence. Can someone please tell me why is DL's sentence not wierd? Thanks in advance...
I can see where you could use this, for example somebody asks you "Spielst du Gitarre?" and you're like "Gitarre? naja, Gitarre spiele ich relativ gud, aber ich bin nicht der beste". (you're shy about it, also)
You might use this when you want to pick up other sentences where they were last left off and then add something to them.
warum ist es "gitarre spiele ich"
It isn't -- the word is spelled Gitarre, not gitarre.
In German, you can often mark a part of a sentence as a topic (the thing that you're going to be talking about) by putting it at the beginning of the sentence; the comment (what you're saying about the topic) then follows it. The topic can be a subject but also a direct object or, for example, a prepositional phrase.
Here, the speaker is marking Gitarre as the topic by fronting it. It's kind of like saying "As for the guitar: I play that fairly well." or "Speaking of guitars, I'm pretty good at playing them."