Translation:They are eating rice.
That phrase is usually used for just general eating. The closer translation should be they are eating. If they want to say eating rice, it should say chi mi fan. Also, rice is a staple diet for the Chinese particularly South China. Northerns eat more noodles. It's like potatoes for the Irish.
It is used to show that the action is in progress.
The preferred translation "They are eating rice" sound almost ironically 'over-literal'. As other people noted already, 吃饭 just generally refers to eating (food), and if one wanted to emphasise that somebody's eating rice in particular, they would say 吃米饭 ...I'm not a native speaker, but I'm very very sure about that - so, reported.