(native speaker) The pronunciation is often good, but not here. I am thinking about the world "Vi". If the emphasis is on the letter "i" , the word would be easier to recognize. First time I heard the sentence it sounded to me as "De äter middag".
Dinner in English has always meant the large meal of the day. Go back 100 years and dinner in North America was at midday. Now it is usually at end of afternoon. Swedes weren't thinking ahead when they named their big meal. :-)
No, we say for example: "See you at lunch" (Vi ses vid lunch) For other times of the day we do say "morgon" (morning), "förmiddag" (late morning until lunch), "eftermiddag" (afternoon) and "kväll" (evening).