The o is usually there if we want to put an adjective acting as an adverb in front of an adjective.
ofnadwy is an adjective (terrible), but by following it with o we can use it as an adverb (terribly...):
- Dw i'n ofnadwy - I'm terrible
- Dw i'n flinedig/gyfoethog/siomedig - I'm tired/rich/disappointed
- Dw i'n ofnadwy o flinedig/gyfoethog/siomedig - I'm terribly tired/rich/disappointed..