“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.
But if there wasn't a noun in the first place? Like how do you translate? "that is in the center of the village"
It is one of Duolingo's excercises, to translate "It is in the center of the village", not specifying if "it" was a city hall or a church.