The difference is in palatalization. As szeraja_zhaba described, it's the difference between l and lj. I'd rather use el Niño as an example, if you're from any of the American countries, as el Niño (Эль-Ниньо) has both normal n and palatalizised n.
It's quite common in North-Eastern corner of Europe and at least Russian differs palatalization in written form. Both Finnish and Estonian leave you guessing and I guess most of the smaller Uralic languages do that as well.
Этот is a neuter adjective-like pronoun, it modifies some other word: э́тот ма́льчик 'this boy'. It’s only used with nouns of masculine gender.
Это has two uses:
- it can be a self-standing pronoun (e.g. in это мальчик 'this is a boy', я это знаю 'I know this')
- or a neuter adjective-like pronoun (это зе́ркало 'this mirror'), when it modifies nouns of the neuter gender.
- when ‘this’ stands on its own and doesn’t modify another word, it’s э́то;
- when ‘this’ modifies some other noun, it’s э́тот (for masculine nouns), э́та (for feminine nouns), э́то.
- Э́тот ребёнок — ма́льчик. ‘This child is a boy.’ (‘this’ modifies the word ‘child’, which is masculine, so э́тот is used)
- Э́то ма́льчик. ‘This is a boy’. (‘this’ doesn’t modify another word, so э́то is used)
Это is pronounced ['ɛtə].
Ето would be pronounced ['jetə], with a Y-sound in the beginning of the word. However, ето is a dialectal form. It’s not used in literary Russian. You probably won’t encounter it. At least I’ve never ever heard it (I’ve found it in a dictionary), and Russian is my first language.