"Those are small."
Translation:Die da sind klein.
Steve32837 has correctly identified the problem with klein
e. As for the subject of your sentence, in this challenge die Eule is teaching a different construction to indicate "those". We use die to indicate plurality. The da works with it to provide additional specificity. If you're familiar with the colloquial phrasing "that there", die da might make more sense (reference the comment from Adrian.fagan).
If Crocodile Dundee were discussing einige Messer:
"Das ist groß. Die da sind klein." ["This is big. Those are small."]
There is no location information in the English sentence to prompt the "da" in German. Perhaps the English sentence should use a more colloquial "those there are small"/ "those over there are small", or maybe this translation should only be asked from German to English. In any case, "das sind klein" is a translation of the given English sentence and should be accepted.