"We are eating and they are drinking."
Translation:Wir essen und sie trinken.
There are 3ish forms of "Sie" (formal you, she and they). The verb that goes with it will give you a hint which is the one being used. If the verb, as in this example is "essen", then look at the "sie" - if it is capitalised "Sie" (in the middle of a sentence), then it's the formal you form. If it isn't capitalised "sie", then it's they. If the verb form is "isst", then the "sie" is she.
Because German doesn't need it.
German just has one present tense, so you don't have to remember the distinction between "is eating" and "eats" (present continuous versus present simple) -- you just use e.g. wir essen, regardless of whether it's a repeated action or one that is taking place right now.