What does "pass it on" mean?

I don't know the song, but pass it on normally means to share something with another or others, whether keeping it for oneself also or not, especially something received from a third party. Thus, for example, if someone smiles at you or greets you, you could be said to be passing it on if you smile at or greet someone else. If someone gives you a platter of chicken, you can take one piece for your plate and pass the platter on to the next person.

I think in spanish you would say pásala. It means to give something you have received (usually something you have appreciated) to someone else. It's also used as a phrase in the game Chinese Whispers to mean relay what I said to the next person.

Have you had a kindness shown?
Pass it on;
’Twas not given for thee alone,
Pass it on;
Let it travel down the years,
Let it wipe another's tears,
’Til in Heaven the deed appears —
Pass it on.
~ Henry Burton, Pass It On