This is very confusing. Either the Finnish translation is wrong, or there should be something indicating that we are talking about some object that has a small owl in/on it. Then "Tässä/Siinä on pieni pöllö." would make sense.
so many people complained here and reported, and here we go, May 2021 and the "correct" translation duolingo offers is "Tässä on pieni pöllö."
Does anybody even check the reports? People complained like half a year ago