Translation:Where do you live?
'Vivir' is the verb in its infinitive state. It often translates to 'to live' or 'living'.
Donde quieres vivir = Where do you want to live?
Creo que me gustaria vivir en españa = I think I would like living in Spain.
One word of caution... do not confuse the second use here with the word 'viviendo' which also translates to 'living'. That is used solely in another tense called present continuous and is paired with the verb 'estar'. That tense implies that the action is currently ongoing.
Estoy viviendo en españa = I am living in Spain
"Where do you live?" and "Where are you living?" are both accepted, but are quite semantically different. Is "where do you live?" actually a bad sentence, because in thinking of it, "where do you <blank>?" sounds like a strange use of a verb. Trying to wrap my head around the grammar but it seems I don't have the right words.
Hi pingpong? Are you not a native English speaker? You are correct that in English there are slight differences in meaning between the two progressive tenses but I can assure you that "where do you live?" is completely correct and sounds fine to the ear. Using the "do" form to make a question (or a negative: I do not swim) is extremely common and even in this case with the slightly unusual verb "to live" is perfectly ok.