The "it" in this sentence refers to a place (class 16) ... and apparently we're supposed to be mind-readers because the English sentence gives no clue.
Why isn't "wanafunzi wameitumia kwa kusoma" acceptable? The answer given assumes a place but there is nothing to suggest that it couldn't be an object.
Can't determine what "it" is...clearly they indicate locative in their answer, but it could be anything that contributes to reading books (I use a computer, some might use a desk to help, or any thing that contributes?