So I dont own one but was interested in what could be done.
As far as I can see the 3rd gen model is less versatile than the 1st and 2nd, because its so locked down and has very limited storage. Its more like an iPhone than a PC.
However apparently it can be jailbroken and Kodi installed onto it: https://github.com/NSSpiral/Blackb0x
Jail breaking means "unlocking" the restrictions apple put on the is on the device so you can do more with it.
But this project is last updated in 2021 and from the looks of it online, fundamentally there isn't much more that can be done. Jail breaking it would be a first step to do anything with it if you want to experiment.
Kodi would certainly give it a new lease of life but that still keeps it as a media consumption device. Kodi is an open source media tool that has a good TV friendly interface, and a huge range of plugins for streaming video and audio (legally but also illegally; kodi itself is perfectly legit and legal but there are plenty of plugins that essentially allow media piracy). You could then sell it on eBay if its working? Someone might want it even if only for cheap?
Other than that, recycle it? If your local refuse centre doesnt recycle it some companies might?