Use of the Demonstrative Pronoun in Spanish

The demonstrative pronoun replaces the noun to which it refers. Instead of "The book is mine" using the demonstrative pronoun we would say "This is mine".
In English there are two words - "this" and "that". In Spanish there are three demonstrative pronouns - Two that are the same as "this" and "that" and a third that refers to an object that is further away.

Example 1: Este es alemán (this is German) pero ese es francés (but that is French) y aquel es holandés (that one over there is Dutch).

“Este”, “esta”, “estos” and “estas” denote proximity of what is indicated with respect to the speaker;
"Ese”, “esa”, “esos”, and “esas” denote distance from what is indicated.

Examples

Mi bicicleta es mejor que esta – My bicycle is better than this one.
Tu colegio es más cerca que ese – Your high school is closer than that one.
Su jardín es más bonito que este – His garden is more beautiful than this one.
Las playas de Colombia son más limpias que esas – The beaches of Colombia are cleaner than those.

Aquel Forms

Examples

Aquel is used to replace a noun that is distant from both the speaker and the listener. It has four forms in Spanish.
Masculine: aquel, aquellos.
Feminine: aquella, aquellas.

Aquel es el río ancho – That is the wide river.
Aquellos son los pueblos aislados – Those are the remote villages.
Aquella es la montaña peligrosa – That is the dangerous mountain.
Aquellas son las frutas venenosas – Those are the poisonous fruits.

Interactive Grammar Exercise - Spanish Demonstrative Pronouns