Translation:I sit on the chair that is marked.
I think adding itu is incorrect. My translator doesn't add itu going from English to Indonesian; and if itu is added the sentence seems incomplete ... e.g. chair marked in red.
"Saya duduk di kursi yang ditandai" would translates as "I sit on A chair that is marked", while "Saya duduk di kursi yang ditandai itu" would translates as "I sit on THE chair that is marked".
Although not necessarily used, "itu" there translates as "the" in English, implying definiteness--although this is rarely taught in Indonesian (we are used to the notion that Indonesian doesn't have any definite marker, while in fact there are a lot of things that can imply definiteness).
I think there could be more than one marked chair, and we still want to say "That one"