Hello! In literary French or if we want to speak in an elegant manner, we use "l'on" instead of "on" to avoid getting two vowel sounds following one another, especially when "on" comes after "et, ou, où, pourquoi, qui, quoi, si" and after "que" or words ending in "que". It's easier, softer and more beautiful to say "Elle dit que l'on..." rather than "Elle dit qu'on..." and "Si l'on entend..." rather than "Si on entend..." We won't do it however if the word following "on" starts with the consonant "l", because it would be hard to say. For example, we won't say "Je veux que l'on lise" but "Je veux qu'on lise".