It smells like something is burning.

(Is this sentence correct? What does 'It' refer to?)

Yes, it's correct.

It is an indefinite pronoun referring to the smell.

Personal pronoun? And then is' like' 'as if' or 'as'?

Using "like" is perfectly acceptable in informal writing.

Yes, the sentence "It smells like something is burning" is grammatically correct. In this context, 'It' is a pronoun used as a placeholder to refer to an unidentified object or situation. It is often used when the true subject is not clear or specified.

To identify what 'It' is referring to, you would need to provide more information or context. Without additional details, we cannot pinpoint what specifically is being referred to as the cause of the burning smell. It could be something in the vicinity, a device or appliance, or even a metaphorical use to describe a situation.