"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.
When talking to more than one person you know well you use "ihr" for "you". The form of the verb with "ihr" is "esst", thus "ihr esst" for "you eat"/"you are eating" (familiar plural).
The verb form "essen" is used with "wir", "sie" (when "sie" means "they") and "Sie" (the formal "you" - but I'm not sure Duo has introduced it yet); so you say "wir essen", "sie essen" and "Sie essen".
What's more, if you look "eat" up in a dictionary the form you will find is the "to eat" form, which grammarians call the "infinitive". "To eat" is coincidentally "essen". As ElbietaWoj13 explains, in German you use the infinitive with helping verbs, for example, "Ich muss essen" ("I must eat"). I think Duo teaches that in a later lesson.
And then there's a noun, "das Essen", which means "food". You'll know it's the noun for food because it will always have a capital letter as all nouns do: "Ich esse das Essen" ("I eat the food").
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.