"Hun læser vejnavnet højt."
Translation:She is reading the street name out loud.
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"Vejnavnet" = "The road name". "The street name" = "Gadenavnet". "...road name..." rejected. http://mentalfloss.com/article/30020/whats-difference-between-street-and-road
Your confusion is justified. This is something one has to learn through immersion, by living and speaking with the Danes. There are a few links about the subject, but I think these would only confuse you more. A quick guide to pronunciation is: Short words ending with the letter "ø" are pronounced as the German "ö". ( Hø, kø, dø, sø, tø, frø, strø, adjø, etc.) or, If the letter after the "ø" is a consonant: ( Afløse, afstøde, afstøve, afsøge, svøbe, bløde, etc.).
If the letter after the "ø" is a vowel, ( "J" in Danish has the characteristic of a vowel) the pronunciation changes to "oi", as in the English "boy". ( Støj, høy, løg, fløj, fløjt, sprøjte, skøjte, etc).
There are of course exceptions, but to get to know them all takes time, and as I mentioned before, immersion in the language. Hope this will help you.