"Sie" is the polite form you use instead of "du" (second person singular) if you don't know a person very well (= "you").
"sie" is either third person singular (= "she") or third person plural (= "they").
Example for "sie" as singular: "Sie IST eine Frau." (= "She is a girl.")
Example for "sie" as plural: "Sie SIND Frauen." (= "They are girls.")
In this case ("Sie sind Jungs.") the "Sie" is only written with a capital letter because it stands at the beginning of the sentence. Otherwise it would be a "sie" because it means "they" here. See http://www.deutschseite.de/grammatik/pronomen/personalpronomen.html
Grammatically, yes. However, contextually not really.
The formal form is not usually used with children. Even with children they don't know personally, older people will use du with children. The use of Sie to address someone typically begins when they are considered 'adult'. Some teachers in high schools use Sie with their students (or at least discuss which form to use with them) as a sign of respecting that they are growing up.
Both are correct "Jungen" and "Jungs". However, there is a subtle difference. "Jungen" defines the plural of "Junge", whereas "Jungs" (colloquially) does not only mean the plural of "Junge", but also "male guys/dudes/fellas/youngsters/lads".
Another characteristic of the difference: "Jungs" is used dialectically in northern Germany.
Duolingo has lesson tips. Look for the light bulb icon when starting a lesson: https://www.duolingo.com/skill/de/Basics-2/tips-and-notes
German doesn't have a standard present progressive like english so "We drink" and "We are drinking" are both "Wir Trinken". The sentence is never "we drinking": Trinken is the plural conjugation of the verb Trinken similar to "drink" being the plural conjugation of "to drink" in english.
The "sind" is completely necessary in "Sie sind Jungen" because the sentence is "they are boys" not "they boys"–which grammatically makes no sense.
Read the lesson tips: https://www.duolingo.com/skill/de/Basics-2/tips-and-notes
All of the above (and more) depending on the grammar: https://en.wikipedia.org/wiki/German_pronouns#Personal_pronouns
Both of those sentences are fine.
Sie sind ein Junge is less common, though, since children are usually addressed as du whether you know them or not, and a boy is a child, but you might hear it towards (say) a sixteen-year-old, who is still a child but old enough that they might start getting addressed as Sie. (Especially at school -- many teachers switch over to Sie when addressing their class at around that time: 10th grade or so.)
You would use Sie when you are speaking to an adult whom you do not know well, or to several adults whom you do not know well. (Roughly: people whom you would call by last name or by title, not by their first name.)
For example, you would use it to strangers, shopkeepers, probably your boss.
Sie (always capitalised) is the polite/formal pronoun for "you" (whether to one person or several).
So Sie sind can mean "you are".
"They are" is sie sind with lowercase sie ordinarily, but at the beginning of a sentence, you cannot tell the difference between sie sind and Sie sind.
is the "g" hearable or more silent?
The two letters "ng" together represent one sound -- like the "ng" in the English word "singing".
You can't hear a separate "g" sound.
Compare the sounds of "singer" (no G sound) and "finger" (with G sound) -- Junge is like "singer", not like "finger".
sie (lowercase) means "they"
Sie (uppercase) means "you" -- the polite or formal form.
They both take the same verb endings, e.g. sie sind "they are" / Sie sind "you are".
At the beginning of a sentence, where the first word is always capitalised, you can no longer tell the difference between sie and Sie.
And thus Sie sind Frauen. can mean "You are women." or "They are women."
Similarly with Sie sind Jungen.
And so both translations are accepted.
I thought that sie meant she not they
It means both.
The verb will tell you the difference -- sie ist is "she is" while sie sind is "they are".
For other verbs, "she" verb forms end in -t while "they" verb forms end in -en, e.g. sie trinkt "she is drinking" versus sie trinken "they are drinking".