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-Do you speak German?
-I speak it quite well.
Is the usage of it as a substitute for german grammatical?
Does providing context make a difference?
Does it sound off to the native ear?
Is there a special category of verbs that accept the word it after them?
The exchange
-Do you speak German?
-I speak it quite well.
Is quite grammatical and seems fully natural to me. The use of a pronoun, such as 'it' to refer to a noun or noun phrase in a previous sentence is very common. Without the question, the answer is unclear as the pronoun lacks a referent. Similar exchanges, such as:
-Can you play the piano?
-Yes, I can play it well.
are also common, natural and fully grammatical.
Any transitive verb may be followed by an object, and a pronoun my generally be used for such an object. In addition, a pronoun may be used in other places where a noun is expected, and may have an antecedent in a previous sentence, as long as the reference is clear.
