"it" in that construction means "half my chili". Just as in "My southern, three-day-cooked chili is gone", "it" is "(their) southern, three-day-cooked chili".
"This chili is no good!"
"What's wrong with it, I ate (some of) it?"
The parenthetical is omitted but implied. Unless they're referring to the chili that is inside your digestive tract?
"it" in that construction means "half my chili". Just as in "My southern, three-day-cooked chili is gone", "it" is "(their) southern, three-day-cooked chili".
"This chili is no good!" "What's wrong with it, I ate (some of) it?"
The parenthetical is omitted but implied. Unless they're referring to the chili that is inside your digestive tract?