Translation:My friends had passed it under the table.
Remember that gender in italian applies to objects too, therefore if the object is of feminine gender (eg. la valigia, la tazza), the past participle has to agree with the aforementioned gender. In conclusion, it's just pure coincidence that Duolingo has chosen to pick the feminine form in the sentence we are discussing. If the italian sentence was "I miei amici l'avevano passato sotto il tavolo" the english translation would be the same (given the context that we are not speaking about humans but rather about objects, which in english are genderless and use the pronoun "it")
The verb passare taking essere or avere is not dependent on the tense but whether it's being used transitively or intransitively. If the sentence is transitive (has an object i.e. passing + something) then you need to use avere, as in the above sentence. For intransitive sentences you use essere e.g 'Due settimane sono passate' -> Two weeks passed or 'La macchina non sarebbe passata' - The car wouldn't have passed.
Imagine a feast with many people and tables have been pushed together to make a long row on one side of the room. There was a little girl sitting under the table and my friends had passed her in order to get out from the bench without disturbing too many of those sitting next to them.
It's an idiom that should really go in the politics section.. "Passed it under the table," refers to an illegal payment or bribe.