It translates to "Are you learning German?". "Do you learn German?" Isn't the greatest way to ask the same question, but it does work, it just doesn't sound right.
It doesn't translate to "You are learning German?" because Duolingo doesn't care about what punctuation you use, the word order itself is not a question. "You are learning German." translated would be "Du lernst Deutsch."
The sentence in question here is "Lernst du Deutsch?", which is proper German grammar, literally translates to "Learn/Learning you (informal) German?"... so that means that a direct translation doesn't really work either, so the English equivalant of the sentence with proper English grammar would be "Are you learning German?".
Now, of they ask you to translate "Are you learning German?" into German, there are a few answers:
Lernst du Deutsch? (Singular Informal) Lernt ihr Deutsch? (Plural you Informal) Lernen Sie Deutsch? (Singular or plural Formal)