There was the first last. That did not last.
Then the scond last, although that last did not last either.
Finally there was another last, finely carved in Beech. The cordwainer had high hopes that the third last would last longer than the last last, and at last he could rest.
Must write the rest of the novel sometime.
One among many different classes of lasts. Imagine an exhibition where last things are shown in order, the third last would be the third item. I know it seems a bit stretched but you can always come up with some imaginary set up in which a sentence makes sense. Yes, even that phrase: "Colorless green ideas sleep furiously"
The only way for me to wrap my mind around this one was to remember that a 'last' is the physical model of a foot (usually made from wood)--with particular measurements to create a specific fit--that shoemakers use to make/design/construct a shoe. If several were lined up on a counter and the customer were asked to choose the one (s)he liked, they could say, "The third last." But of course 'sidste' wouldn't be the Danish word for such an item. Otherwise, I don't understand the phrase at all! As others have speculated, it could mean the "third from the last."
I am a native English speaker (UK), and probably wouldn't add another 'the' prior to the word 'last'. For this phrase I would probably say 'the third from last' i.e. the third (position) from last (place), or I would say 'third to last'.
If this person were to finish one position worse off, without a doubt I would say 'second to last', so the same structure for 'third to last' also seems acceptable to me. However, I understand your translation, and it means the same thing, so still correct, just different to how I would say it.