This is the 973rd most frequent Icelandic word.
umhverfis
"Umhverfis" means "around" or "surrounding" in English.
In this sentence, 'umhverfis' is a preposition indicating spatial relation, showing that the children are playing in the area surrounding the house.
Börnin leika sér umhverfis húsið.
The children are playing around the house.
Here, 'umhverfis' is used adverbially to denote the vicinity or immediate surroundings of a place, emphasizing the local environment.
Náttúran er mikilvæg fyrir okkur öll umhverfis.
Nature is important for all of us in the surrounding area.
In this context, 'umhverfis' is a preposition combined with 'hringinn', describing spatial positioning surrounding an object, the 'ring' in this case.