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The point of this saying is that whoever is the "best" will be the ruler or leader even if they are not very good.
In this instance, what it is saying is that normally, we would not think a person with just one eye has very good eyesight or is very lucky. We would usually think they are a little handicapped. But if you compare that person to a group of blind people, well of course they are luckier and have better vision.
So the meaning is just that you don't have to be good to rule, or win etc -- you just have to be better than the competition.
This proverb is translation of a proverb in Hindi. The essence of the Hindi proverb will be better reflected if translated in English as "one-eyed king among blind".
This proverb is used to refer to someone or something that is not very good but is stil the best choice as all other alternatives are even worse.
The proverb does not imply that the person who is the best among a group having only incompetent members will still make a good leader of the group or a good king. It is only referring to the advisability of managing with best that is available even if it is not wholly satisfactory.
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