Translation:There are bell peppers and cheese on the pizza.
first thing first. the french might be incorrect grammatically (it isn't), but the french sentence is the original so it can't be incorrect when compared to the english. the english can be incorrect when compared to the french.
there is unlikely to be A bell pepper on this pizza. even on a large there would only be some part of a whole pepper. that's what the french says, some pepper. but in english, we say peppers, meaning pieces of peppers, as often as pepper. it's not better or worse, it's a common usage.
'de lait' is a complement of 'peu'. this is the commonest form for such a complement, using 'de' without an article. 'peu' is the part that speaks to the quantity, 'de lait' only describes what that quantity consists of.
'du poivron' is the complement of the stative verb 'to be' (il y a means there is). when you say 'there is' the thing that is is 'le' thing or 'la' thing. you're example must have been 'le poivron' and some of that poivron is 'du poivron'--'de + le'
"l y a deux poivrons et deux fromages sur la pizza" was rejected. However, the pronunciation of this answer is identical, I think, to the example given. The interpretation, common among pizza eaters, is that there are two kinds or peppers and two kinds of cheese on the pizza. This does not seem unreasonable to me, and since it sounds the same as the example given, should be accepted.
The pronunciation of "deux" and "du" are actually a bit different. In API, the pronunciation of "deux" is \dø\, and the pronunciation of "du" is \dy\. You can put both words in Google Translate on the left side individually and click the Listen button to hear them pronounced. "Deux" is pronounced closer to the English "do", and "du" is pronounced closer to "d" + the English "you".