“Elle est au centre du village.” / It is in the center of the village.
Why not “C’est dans le centre du village” or “Il est dans le centre du village”?
Remember that in French, every noun has a grammatical gender: "it" is elle for feminine nouns and il for masculine nouns. When it comes to your sentence; the noun in question could easily be "la mairie" (the city hall) or "l'église" (the church), both feminine:
-Où est l'église ?
-Elle est au centre du village.
-Where is the church ?
-It is in the center of the village.