A pronoun is a word that is used in place of a noun.
Josie is my sister. She is kind.
In this example the pronoun she is used instead of repeating the noun Josie.
A pronoun can also be used instead of a noun phrase.
I like cats with stripes. I think they are pretty.
In this example the pronoun they is used instead of repeating the noun phrase cats with stripes.
When using pronouns instead of nouns it is important to make it clear who or what the pronoun is referring to, otherwise the sentence will be confusing.
Sid and Sam are friends. He gave him a CD for his birthday.
In this example we don't know whether Sid gave the CD to Sam or the other way round, so it would be better to repeat their names.
Sid and Sam are friends. Sid gave Sam a CD for his birthday.
The pronoun 'his' could still refer to either Sid or Sam, but it is usual to receive presents on your birthday and not give them, so we can assume that it is Sam's birthday, not Sid's!