"Twenty families live here."
Translation:Venti famiglie vivono qui.
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Here's a link with a good explanation: https://dailyitalianwords.com/qui-vs-qua-li-vs-la-in-italian/
"abitare" is only used with the meaning of "living in a particular place", more or less like "to reside" (but "to reside" in English is much less used than "abitare" in Italian).
"vivere", on the contrary, expresses all the meanings of the verb "to live", hence both "to live in a place" and "to conduct a life".
In this DL exercise, both the verbs are correct (if "abitano" is marked wrong, report it).