"They are small animals."
Translation:To jsou malá zvířata.
This is the common "to jsou/jsou to" pattern. Please do also read other questions and answers here and under other sentences.
Oni jsou... is possible and accepted. But that would be most likely used if you wanted to say about a group of people that they are small animals. Quite weird but possible. But it could also be a group of animals if they are grammatically masculine animate. Anyway "to jsou" or "jsou to" is more natural here.
You forgot the "malá", so Duo found the closest correct answer to your "To jsou zvířata", which happens to be "To jsou zvířátka" and assumed you accidentally left out the "k" (a typo).
"zvířátko" is a diminutive of "zvíře", and a diminutive is close to "little something" in meaning. Thus "malá zvířata" =~ "zvířátka".
Yes, it's very common and productive in Czech. There are usually more tiers:
- stůl - a table
- stolek - a small table
- stoleček - a tiny table
- dům - a house
- domek - a small house
- domeček - a cute/beloved house or a house for dolls
- noha - a foot
- nožka - a little foot
- nožička - a baby's foot or a small leg of an object
Sometimes diminutives create new words with a different meaning:
- list - a leaf or a sheet (of paper)
- lístek - a ticket (or a small leaf)
- lísteček - a tiny leaf or a small piece of paper
- nůž - a knife
- nůžky - scissors