The point was that there are many masculine nouns in Greek, like ο ελέφαντας that would require an "it" in English, but would require this sentence in Greek, because the elephant is masculine. I cannot replace ο ελέφαντας with αυτό, because they do not have the same grammatical gender.
Person 1: There goes an elephant! Person 2: It is mine.
Are you really saying that even though elephant is masculine, I should use a neuter demonstrative to refer to it? That goes against everything that I know of Ancient Greek and anywhere else in the Modern Greek course.
But in this specific case, the translation of what was above could in fact be:
Person 1: βλέπω έναν ελέφαντα Person 2: αυτός είναι δικός μου
Ultimately, I really don't care whether "it" is accepted here. But in the parallel exercises in German, you are expected to know that "er" could mean "it" depending on context, and have to be able to translate it that way. Similarly, in French there are several exercises to break down the idea that "le" and "la" always mean "him" and "her" and can in fact mean "it" in specific contexts (which are not provided in the Duolingo sentences). Here the Greek course reinforces the native English speaker's thought that "masculine=he", "feminine=she", "neuter=it", (see Emily's response above that started this exchange) which is simply not true.
Other courses even have both possibilities as preferred translations, so that you can be forced to translate a masculine as "it", at least in the multiple choice questions.
I suppose it's just a difference of philosophy…
Please read few comments below about why it is mine is not accepted in this case. Translations in DL work for strings/sentences/specific exercises. Here the learning objective is to learn the masculine possessive and adding all genders in one sentence will confuse all users and the purpose of this exercise.
Sorry for jumping in so late but it is mine is not correct because that sentence teaches the word δικός that it is the masculine possessive. So if we accept it is mine then automatically we need to accept she is mine. The correct are the following:
He is mine = Αυτός είναι δικός μου
She is mine = Αυτή είναι [δικιά/δική] μου
It is mine = Αυτό είναι δικό μου.
The thing is that English does not have grammatical gender but Greek does.
So English "it" can refer to any inanimate thing, but in Greek, you can't say αυτό το μπλούζα είναι δικό μου, can you? You would have to say Αυτό είναι δική μου even though in English it would be "it is mine".
Similarly for αυτός ο κύβος είναι δικός μου = αυτός είναι δικός μου "this cube is mine = it is mine".
Accepting "it" does not require accepting "she".
Well, this and that make sense because they are pronouns too and αυτός can be a demonstrative pronoun (ποιός είναι αυτός; = who is this? / who is he?)
Accepting it is mine when the correct translation is αυτό είναι δικό μου (δικό μου is taught in the same lesson) does not explain exactly your comment.
As per your example:
Αυτός ο κύβος είναι δικός μου = This cube is mine
Ο κύβος είναι δικός μου = The cube is mine
Είναι δικός μου = It is mine
IF you add αυτός like in the Greek phrase of this discussion (αυτός είναι δικός μου) then the only alternatives are [He / This] is mine.