modern (something)

"Modern" is an adjective that describes culture, fashion, ideas, technology, etc. It means "recent" - usually within the past 25-50 years, although for some technology products it can mean as recent as 2-3 years old like:

The computers at the library need to be updated to a modern operating system. They're still using Windows XP.

"Modern life" is a common phrase on its own. It means the way that people live in the present times.

confusing

Remember that when you're talking about a situation or topic, it's "confusing". When you're talking about your feelings, you say you're "confused".

interact with (someone)

This means to communicate or deal with someone, but the word "interact" is more general than "communicate" in that it also could include time that you spend with a person (or animal) without communicating anything.

It's interesting to watch how Toby interacts with other dogs when they meet on the street.

You can even "interact with" things that are not alive:

Good architects pay attention to the ways that people interact with buildings.

In that case, "interact" means how you use and treat the buildings.

The phrase "how we interact with each other" from the example sentence at top is pretty common in essays and speeches. It means "how people deal with other people".

(something) is (adjective), in that (independent clause)

You use this structure when you're describing something with an adjective, but you think your description needs more explanation. In the example sentence at top, you say that modern life is "confusing". But that could mean a lot of different things. Why is it confusing? Which part of modern life is confusing? Using "in that..." makes it clear what this means.

What follows "in that" is an independent clause, which basically means a whole sentence. This is a sentence:

It was announced 6 hours ago.

And here's that sentence used with "in that":

It's already old news, in that it was announced 6 hours ago.

This sentence (taken from a blog post by the musician Moby) is supposed to be a bit of a joke about how fast news spreads these days.

"In that" is used more in written English than in spoken conversation.