This is the 312th most frequent Russian word.
оно
"It" (neuter pronoun).
Here, 'оно' refers to a neutral-gender entity, possibly an animal or object, indicating the subject.
Оно живёт в лесу.
It lives in the forest.
In this case, 'оно' refers to 'кольцо' (ring), which is a neutral-gender noun in Russian, functioning as the subject of the second clause.
Я нашёл это кольцо, и оно прекрасно.
I found this ring, and it is beautiful.
Here, 'оно' is used generically to refer to the previously mentioned object whose gender is neutral or unknown.