Translation:You are welcome!
The reason "you're welcome" is counted as a typo is that Duolingo removes punctuation before it assesses answers, and it counts the apostrophe at the beginning and end of words (but not in the middle) as punctuation. Since the word bank presents " 're" as its own word, Duolingo interprets it as "re" without an apostrophe, but then compares it to the sentence in its database, and decides "Oh wait, where's the apostrophe!" It's nothing our Chinese contributors can do anything about. It's an error in the system.
Literally by character 不=no, 客=guest, 气=air/ energy 客气=Polite. This is a compound word (the "energy of guests", or the way guests act, is politeness) 不客气 = You're welcome (someone is thanking you, ie being polite and formal, and you are saying literally, "don't be polite", meaning "you don't need to thank me/you don't need to be formal about this/relax". This is similar to the origin of our own English phrase "you're welcome." Someone is thanking you, and the appropriate response is "You're welcome," short for "You are welcome (to the thing you're thanking me for.)" The root meaning of both the Chinese and English versions is essentially saying "oh you don't need to thank me."
Why on earth do you give me access to " 're " and then tell me "You're welcome" has a typo and should be changed to "You are welcome?"
Literally this means "No politeness!" or "Don't be so polite." It's a Chinese expression and I understand why you have to teach it, and that it's hard to account for all the translations it could possibly have in English but... still, there's a lot of people not using the word bank who'd like to have words with you!
@Simon - Precisely my point. So the above sentence is correct - "You are welcome". When someone reads it then you'll hear "You're welcome" anyway. :-) Unless if they are emphasizing something in which case you'll hear "You - are - welcome", still maintaining the correctness of the written sentence. :-)