In the old days, people thought that their souls left their bodies when they sneezed. They were worried that their souls might not get back into their bodies safely. So they said "Bless you" to pray for the safe return of the soul. No one believes it today, but people still say "Bless you" when they see somebody sneeze.
(What does "it" refer to in "No one believes it today."?)
I take "it" to mean the belief or superstition about the soul leaving the body.
In the sentence "No one believes it today," the pronoun "it" refers to the belief that the soul leaves the body when someone sneezes. Since the previous sentence mentions that people used to believe in this idea, the pronoun "it" is used to refer back to that belief.
