"That object is a machine."
Translation:Tiu objekto estas maŝino.
The short answer is that you use "tiu" when a noun appears in the sentence. Ĉu tio estas maŝino? Jes, tiu objekto estas maŝino.
(Tiu is also used to refer to people without a noun, and occasionally when there is a noun obviously understood from context.)
Thus "tiu" is which, who, or sometimes which one. Tio is the more generic what. (But in English we tend to say "what" when we should say which, making this explanation more difficult than it should be for us!)
Gramatically, yes. But it might not necessarily be understood as intended. With adjective roots, the convention is that adding a verb ending ("-i", "-is", "-as", "-os") means the same as using the adjective with " est-…", i.e., to be like that / to have that attribute/property:
"La hundo grandas." = "La hundo estas granda."
But "maŝin-" is noun root, so at least to me, it'd be unclear whether "maŝini" means to be a machine, to be like a machine, to act like a machine, to operate a machine, or yet something else.