Translation:The tourists are admiring the blue and white sky.
While "sinivalkoinen" literally means "blue and white", it has also other connotations. We have only blue and white in our flag, so mentioning that something is sinivalkoinen can mean that it is a Finnish origin, instead of its color. Maybe that is the reason to combine the colours in this case.
Yep, but this is how colours work in general, also in other kinds of compounds.
"Valkovuokko" (wood anemone), "valkoviini" (white wine), "valkosipuli" (garlic)...
"sinitiainen" (blue tit), "sinisorsa" (mallard), "sinivalas" (blue whale)...
"puna-apila" (red clover), "punajuuri" (beetroot), "puna-armeija (the Red Army)...
"vihersalaatti" (green salad), "viherpeukalo" (green thumb) "punaviher(väri)sokeus" (red-green colour blindness)
"keltavahvero" (chanterelle), "keltasirkku" (yellowhammer), "keltanokka" (rookie, lit. yellowbeak)
"valkomustaraidallinen" (white and black striped)
Colours such as "musta" "harmaa", "ruskea" and "oranssi" are not shortened in compounds.
This is also a common way to describe shades of colour in Finnish: "keltavihreä" - a yellowish green, "punaruskea" - a reddish brown, "sinivioletti" - a bluish violet... And then there's "sinipunainen", a bluish red, an oldfashioned word for purple.
This doesn't work for all colours though, for some reason "keltavihreä" is fine but the other way round it's "vihertävänkeltainen".
Oh, they can be combined, they just don't get shortened, (or at least not the same way). As to why they work differently, I'm not sure. "Musta" and "ruskea" are already pretty short, so that might be one.
"mustavalkoinen" - black and white
"mustarastas" - blackbird
"mustapapu" - black bean
"mustapippuri" - black pepper
"Ruskea" can get shortened, actually, but sometimes it doesn't. If it does, the form is "rusko".
"ruskolevä" - brown algae
"rusko-orakas" - terracotta hedgehog (a mushroom, hydnum rufescens)
But you can't combine other colours with "rusko". That just doesn't sound good.
You are right. I just picked it up during the course. There are many more verbs like that. Somebody explained it to me once during the course. Unfortunately I cannot reproduce his whole story. But for now: at least all verbs that has something to do with love, admire etc is followed by the partative