the only special thing i can think of for the it variable is as iterated item for inline loops (or however this is called):

ls | where ($it.name | str contains "foo")

but afaik this is just assigned within the where and shouldn't affect anything else..

i suspect that this issue could be due to it not recognising the variable as closure since the following (with explicit closure-markings) works:

let tmp = {||
  let it = 42
  print $it
}
do -c $tmp

EDIT: it recognises both as closure ($tmp | describe), but maybe something internal is different