Sie ist insbesondere für die außergewöhnliche Lage ihres Stadtkerns bekannt, der beinahe vollständig vom Fluss Inn umflossen und daher eigentlich nur über Brücken erreichbar ist.
The center of a city is the »Stadtkern« in German, which literally is »city core« or »town core«. The word »Stadtkern« is a compound noun, built from these two components:
- die Stadt (feminine, the town, the city)
- der Kern (masculine, the core, here: the center)
The gender of compound nouns is always the gender of the last component. (This is one of the rare rules that don't have any exceptions.) Since the last component is masculine, the whole compound noun is masculine:
- der Stadtkern (masculine, center of the town/city)
The relative clause describes a property of this city center:
It is particularly known for the unusual location of its town center, which is almost completely surrounded by the River Inn and therefore only accessible via bridges.
The fact, that »Stadtkern« is part of the genitive attribute »ihres Stadtkerns« inside the accusative object »die außergewöhnliche Lage ihres Stadtkerns« (which itself is the inner object of the prepositional phrase »für die außergewöhnliche Lage ihres Stadtkerns«), doesn't matter. Also in the English translation, the term »town center« is hidden inside »its town center« which is inside »of its town center« which again is some kind of attribute of »location«, so, it's roughly the same nested construction as in German, and still you can provide properties of this innermost part of speech in this nested construction in a relative clause, in English as well as in German.
The personal pronoun »sie« at the beginning of the sentence refers to a feminine noun, that must exist in the context (most probably it was mentioned in a sentence before), and the most likely word is probably »Stadt« which probably is part of »die Stadt Wasserburg am Inn«.