"Musée des Beaux Arts" is a poem by W.H. Auden, about the ability of the Old Master painters to depict human suffering, whether in actual pain or in simply living and being in normal, everyday life. The word "it" in the third line refers directly to that human suffering:

About suffering they were never wrong,
The old Masters: how well they understood
Its human position: how it takes place
While someone else is eating or opening a window or just walking dully along;

"It" is the human suffering that is emblematic of the human condition itself. There is no part of human life that is not touched by pain in some way or form; even happy moments are tinged by unconscious sorrow that the moments themselves cannot last forever. Auden goes on to cite Pieter Bruegel's painting Icarus, showing the continuation of life as Icarus falls from the sky. Auden writes:

...the ploughman may
Have heard the splash, the forsaken cry,
But for him it was not an important failure...
(Auden, "Musée des Beaux Arts," english.emory.edu)

While the story of Icarus is legendary, it is only such as compared to normal, everyday life. The ploughman who is working the fields is not concerned with Icarus, because he has his own problems to worry about. Even in noticing Icarus falling from the sky, the ploughman is more concerned with his own troubles; the falling boy  is "not an important failure" because his death has no effect on the ploughman. In this way, Auden shows how the Old Master painters showed the shades and vagaries of human suffering through both amazing and ordinary events.