The other answers have already noted that the y there is originally about a location. I'd like to point out the difference with and without that y.
The sentence je n'y vois rien means that something is preventing you from seeing anything around you, be it darkness, heavy rain, blindness... and has become set in that meaning.
―Il fait complètement noir ici, je n'y vois rien !
Je ne vois rien can be used in the same way, but will more often mean that you can see your surroundings, but you don't see anything relevant to the current situation in there.
―On doit partir, mais j'ai l'impression d'oublier quelque chose...
―Non, je ne vois rien. [Je ne vois aucun objet qu'on doive emporter]