Is the preposition of necessary in the following?
Life is what you make (of) it.
I'd appreciate your help.
Practically speaking the two sentences have the same meaning.
However, there is a subtle difference between the two if you want to be analytical:
Life is what you make it.
This puts slightly more emphasis on you actively doing something to affect life.
I decided to make a change by running for government. Now I help serve people every day. I know that life is what you make it.
Here, you go out and change something.
Life is what you make of it.
This puts slightly more emphasis on life happening to you, but interpreting it into something significant for you.
I lost my arm in an accident. It led me to see where I had put my priorities. I see now that life is what you make of it.
Here, losing the arm happens to you—and your worldview shifts as you adjust to the new situation.
But, really, the two variations could be swapped, and nobody would be confused.
There is also a third variation:
Life is what you make out of it.
I would interpret out of in the same way as of.
Note that there is a different construct, where the pronoun it at the end of the sentence is not used. Instead, a different noun follows. In this construct, you have to use a preposition, otherwise the sentence is ungrammatical:
Breakfast is what I made out of eggs.
This is fine. (Even if not a common construction.)
Breakfast is what I made of eggs.
This is also fine; however, I think that the out of version sounds more natural in this case.
✘ Breakfast is what I made eggs.