¿Qué es esto?: esto, eso and 'that one'

este vs esto: gendered or neuter

Beside the twelve gendered forms sit three neuter ones: esto, eso and aquello. They never go before a noun. They point at something with no noun: an unknown object, an idea, a situation.

• ¿Qué es esto? - What is this? (you don't know what it is)
• No me gusta eso. - I don't like that. (something just said)
• Aquello fue un desastre. - That was a disaster. (a past event)

Once you name the thing, switch back to the gendered form:

• ¿Qué es esto? Es un libro. Este libro es para ti. - What's this? It's a book. This book is for you.

Introducing someone uses the gendered form, because the person has a gender:

• Este es mi hermano. - This is my brother.
• Esta es mi madre. - This is my mother.

Adjective or pronoun: saying "that one"

The same words stand alone to mean "this one" and "that one". They still agree with the noun they replace:

• ¿Qué libro quieres? Ese. - Which book do you want? That one.
• ¿Qué casa? Aquella. - Which house? That one over there.

Since 2010 the Real Academia Española recommends no accent on these (ese, not ése); since 2023 it tolerates one only where the sentence would otherwise be ambiguous. The demonstrative pronouns page covers this use in full.