It stands for "My". With a possessive structure like this, with a pronoun, the pronoun stays in its nominative form, only the possessed gets a suffix.
My horse - az én lovam
Your horse - a te lovad
His/her horse - az ő lova
Our horse - a mi lovunk
Your horse - a ti lovatok
Their horse - az ő lovuk - yes, "ő", not "ők", even the plural "-k" is omitted from the pronoun.
Isn't it not necessary, though? Why add the "én" if "A lovam nagyon lusta" suffices?
It means "I", but it's not necessary. "A lovam nagyon lusta" would mean the same.
The root was lov-.
In the nominative, where there is no final vowel, lov was considered not pronounceable, and so the -v disappeared while lengthening the vowel and you have ló.
In other cases, where the -v is not at the end of the word, it was kept.
Similarly with kő "stone" (accusative követ; compare Finnish kivi "stone").