。
Is she making dolls?
Literal
She [topic-は] dolls [object-を] is-making [question-か]?
A polite progressive question using ~ていますか. The politeness level (ます form) is appropriate for asking someone you're not close with about a third person's activities. 人形 (にんぎょう) is the general word for dolls and figurines of all kinds — from children's toys to traditional craft dolls.