ahem... civitas (gen. civitatis) means a classical city state (or Polis) such as Rome, Athens, Sparta, Thebes (etc). It doesn't really mean a "state" in the modern sense of the word. A better translation would have been City. When I see the words "estne civitas" I automatically translate this as "is it a city?" into English -- because that is what sounds most logical or natural in English. I certainly wouldn't pick Duolingo's dodgy translation. The modern English word "state", in Latin, would surely be better translated, into Latin, as res publica (i.e. "commonwealth") or dioecesis (gen. dioecesis).
While I suppose there is nothing incorrect about this question in either the Latin or English, it strikes me as particularly odd. Should it actually mean something else? It is certainly not something that would be said in every day English conversation.
I am wondering about the translation to "is there a state." I don't know Latin at all, but in its offspring languages there are different verbs for there is/there are as opposed to to be. So I would think the sentence meant, "Is it a (or the) city state?" I did check a dictionary and couldn't find any separate word for there is.