"We are from Brazil."
Translation:Wir kommen aus Brasilien.
Because you are expected to answer in German, and the German name of the country is Brasilien.
Just as it would be marked wrong for the reverse translation if you answered "We are from Brasilien" -- you used the German name in an English sentence, where you should have used the English name of the country instead.
Of course, this raises the question - why do countries decide that they get to rename another country? If I meet someone named Miguel, and decide unilaterally that I will call him Mike, because that's the English version, that's inappropriate. In the Spanish course, putting "John" in an English version where the Spanish said "Juan" would be marked down. This (the practice, not Duolingo supporting it) is more than a little skewed. (And yes, I'm aware that bringing this up in a course labeled as "German" is somewhat ironic; however, the fact that Americans do it as well doesn't make it appropriate.)
We're learning the principles of language here, and those were formed far before respect for people and cultures was forced into peoples.
But then, are they calling names on each other? No, that's just some old word that remained. Everyone does that, and noone's getting angry about it -- it's different languages and cultures, and a person from one cannot plainly tell a person from other, what to call them. French call Germany "Allemagne", Latvia calls Russia "Krievija", Brazil is actually called "Brasil" and you English speakers just butcher the name.
Point is, let them do in peace what harms nobody, because you do the same thing. And even if you didn't - that's your choice that you cannot force unto others. Also, you've never in your life called Japan and China by their true names, so shut it.
Based on the subject you use, it is different. Example: Ich komme... Du kommst... Er/sie/es kommt... Wir kommen... Ihr kommt... Sie kommen...
They all mean the same thing, they just are used differently based on the singular or plural subject being used in the sentence.