Why is "Quis in urbe est" also accepted?
because "in urbe" is the ablative case of "urbs". I reckon that this is too advanced for the first skill so duolingo accepts the conjugation you used!
Why not "in oppido"?
also Oppidum should be accepted since it is a synonym
The word order doesn't matter as long as the conjugation is correct.
I dont understand difference in est and es
est -> 'he/she/it is'
es -> 'You (singular) are'
Does that help?