The Catholic ruler of Saxony was one of the few German leaders to support the French. Saxony was put under Russian occupation and 40% of the Kingdom, including the historically significant Wittenberg, home of the Protestant Reformation, was taken by Prussia, but Frederick Augustus was allowed back to rule the remainder of his kingdom, which still included the major cities of Dresden and Leipzig. The Kingdom also joined the German Confederation, the new organization of the German states to replace the Holy Roman Empire.
The Austro-Prussian War and the German Empire
During the 1866 Austro-Prussian War, Saxony sided with Austria. The Saxon army was the only large army to help Austria. At the peace talks Austria said Saxony should not be punished. The other states in north Germany including the large Kingdom of Hanover were annexed (taken over) by Prussia after the war. These states had promised help to Austria but did little, so Austria did not try to help them at the peace talks.
John I, as Saxony's king, was below the Emperor, although he, like the other German princes, kept some of the rights of a sovereign ruler, including sending ambassadors other states.