"There are many small houses along the street."
Translation:Det finns många små hus längs gatan.
att finnas means "to exist", and that's how it's used - for pointing out that there exist some things, like many small houses in this case.
att vara means to be, and we use that for abstraction. One such example would be det är inte möjligt ("it is not possible"), where the det/it doesn't really signify any concrete object.
Note that you could say det är många små hus längs gatan - it's not ungrammatical, just sounds a little bit off. But it doesn't work the other way around: finnas is strictly for existance.
Thanks for the answer. I just did this lesson again and it said "Det finns många små hus längs gatan." and "Det finns många små hus längsmed vägen." are both correct. I still don't really get why the combination is incorrect.
Added that combination. (vägen still isn't a very good translation though, for the reason Zmrzlina says)
Not really. We don't usually talk about houses as standing in Swedish unless we want to stress that we view them as tall. Actually ligger is a much more normal verb for houses in Swedish than står.
why is "det finns många lilla hus längs gatan." not correct? is lilla just not used in this context?