Translation:There are several Finno-Swedish cities in Finland.
No, not really. Finlandssvensk + stad = an ethnic community. I don't get the feeling that the 'cities' are speaking. Even though a commedian might try the joke, I think it would be quite hard to get Swedes to realize the implication. So your alternative translation isn't really an alternative.
Fennoscandinavia is a geological, geographical concept, not an ethnic. Geologically Scandinavia is a mountain range, the most northern "peninsula" which contains just Norway and Sweden. If you want to add also the Finnish part (+ the russian peninsula Kola) and talk of a bigger part of this 'peninsula' of the European continent, then we say: Fennoscandinavia.
I doubt Duolingo researched this question that much, but in Finland if a city has more than 8% or 3000 Swedish or Finnish speakers (whichever is in the minority) it's considered a bilingual municipality.
So a town with more than 92% of native Swedish speakers and less than 3000 Finnish speakers (these towns exist) would be considered a Swedish speaking town. Not a fennoswedish town, such a concept doesn't exist.
You mostly notice this in road signs. Bilingual cities such as Helsinki have all addresses and other information in both languages. Monolingual towns are only required to use their own language. Naturally the majority of monolingual municipalities are Finnish speaking. It may also affect the availability of public services (those that fall under the city's juristiction, national services are always offered in both languages).
Åland is an exception due to its autonomy. They're not tied by Kielilaki (= Language law) and therefore opt to do everything in Swedish regardless of demographics.
No that's not quite correct. They are not "ethnic" Swedes but Finns who happen to speak Swedish. As far as I know according to current research the Swedish speaking Finns are genetically quite close to the Finnish speaking population who live in the same area. Of course, there are genetic differences inside the country (west vs. east etc.) like in most countries, and the Swedish influence is most clearly found in the west coast.
So the Swedish speaking Finns generally do not think of themselves as ethnically Swedish, except perhaps the ones living on the islands of Åland. But it is probably true that in some places at least on the west coast they do feel that they have ethnic ties to Sweden. Matters of identity are sometimes complex.
Maybe I use the word 'ethnic' the wrong way? I have seen genetic researh concluding that Finns are genetically very close to the other Scandinavian populations, it is the language 'Finnish' that has been borrowed in from the east. What is correct I don't know? But Swedish speaking people also read swedish and are therefore incuded in the Swedish literatur - that is 'ethnic' in my vocabulary.
Yes "ethnic" is a tricky word, one can separate racial or linguistic or national etc. ethnic groups. I was just thinking about how they would identify themselves if asked. My sense is that they self-identify "ethnically" as Finnish (on many dimensions of the word "ethnic"), but maybe it varies.
Maybe it's safest to say that they are a separate ethnic group in themselves, the Finnish Swedes, and that is probably their core identity. See: https://en.wikipedia.org/wiki/Swedish-speaking_population_of_Finland#Identity
"I have seen genetic research concluding that Finns are genetically very close to the other Scandinavian populations"
I don't know that much about genetics, but that does not sound right, there is large amount of genetic variation inside Finland. And in some places the genetic distance from the Scandinavians is much larger than the geographic distance would lead one to suspect. There is a lot of misleading material or wrongly interpreted research on these matters on the net, so I won't say anything more to add to the confusion, since I'm not an expert either.
Finland Swedish or Fenno-Swedish = finlandssvensk.
There are 15 monolingually Swedish municipalities in Finland, all of them belong to Åland. In Finland a municipality is bilingual if more than 8% speak one of the official,languages: Finnish or Swedish or Sami.
Nobody says Finno-Swedish. The name would imply that Finlandsvesk people identify as Swedish and as someone who is married to one I can tell you that none of them do. They are Finnish and in English it would be correct to call them a Swedish speaking Finns or simply Finlandsvensk.
There are several Finlandsvensk towns in Finland.
I am also married to a "finlandssvenk" man and he and all of his family back in Malax think of themselves very much as Swedes in a Finnish environment. When I went there to visit and asked if they understood Finnish or if their kids learned Finnish in school, they nearly lynched me!
Out of curiosity, which ones would you consider to be finlandssvenska städer? Besides the obvious Mariehamn that is. Turku/Åbo? But even there I had the impression as if most people spoke Finnish... so which else?
I lived in Oulu for a year and even though it has a Swedish name too (Uleåborg), I have never met a person with Swedish mother tongue there.
Check out kirakrakra's link in an above comment - I think that page, especially the map on it, illustrates it fairly well.
Many Finnish cities have different names in Swedish due to Finland being occupied by Sweden for such a long time. It's not in itself indicative of a Swedish-speaking population any longer.