I have just a few things to add to what Johnny said:
#3: "By number..." is an adverbial phrase that modifies "ranked". If you place it directly next to the word that it modifies, the sentence becomes more clear:
"It is ranked, by number of currently available applications, as the world second..."
#2: "It" = "the App Store". The words "mobile software distribution network" are simply a description of the App Store. If you omit those words, the meaning of the sentence changes very little:
"the App Store offered more than one million apps by Apple and third parties and is ranked as the world's second largest of its kind"