Class as an instance of itself
Class is a special class in that it can create new classes. Now since Class itself is a class, it can only be created by Class and this is how Ruby defines this. Your take away:
Class is an instance of Class.
But how can Class create itself if it doesn't exist? That's a good point. I would say just think of it as a special entity that has created itself.
Class as a kind of instance of Object
Class is also a subclass of Object. So all instances of Class are really just specialised instances of Object. In other words an instance of Class is an instance of Object plus all the powers of the class Class.
Using this thinking and as defined earlier: Class is an instance of Class. Thus Class is a specialised instance of Object.
Let's now consider Object. Object is a class and all classes are instances of Class. It follows that Object is an instance of the class Class.
So which came first? Object or Class?
Object is a class so Class must exist first in order to create Object.
But Class is a subclass of Object, so Object must exist first. So which is it? Just accept it as a circular definition, i.e. Object needs Class, but Class needs Object, but Object needs Class etc etc.