Spanish demonstrative pronoun
Demonstrative pronouns indicate which person/people, thing(s) or places the speaker is specifically talking about, in relation to the distance between the speaker and the person/people, thing(s) or places.
Esa es la hermana de Pepe.
That's Pepe's sister.
Este te queda mejor.
This one suits you better.
Aquel es el pueblo de mi abuelo.
That one is my grandfather's village.
Notice that we have three types in Spanish. Depending on the distance between the speakers and the noun the pronouns are refering to we will use (as a general rule):
Este and its other forms when it refers to something/someone near the speaker.
Ese and its other forms when it refers to something/someone near the listener.
Aquel and its other forms when it refers to something/someone far from both the speaker and the listener.
Spanish demonstrative pronouns agree in gender and number with the noun they are referring to.