Translation:The playing children are running around in my little garden.
When the "g" is hard and the "d" is pronounced with the stress on the second syllable, then the word means "legend" (I know some sentences pronounce it this way when it's supposed to mean "playing")
When the "g" is soft (and modifies the vowel) with the stress on the first syllable it is the present participle of "at lege"
Please see the answer from Xneb. In this sentence "legende" means "playing", and the "g" is soft (which is correct here). If Duolingo has another audio sample where "legende is pronounced with a hard "g" and the meaning is clearly "playing" then the Duolingo audio sample is incorrect.
The last word "have" is still incorrectly pronounced in this Duolingo audio sample. I should have reported this as an error instead of adding a comment...