Этот is often used for both situation unless you deliberately want to stress that "that", such as when you need to contrast two objects where one is next to you and the other is further away.
Then, you can use тот for masculine nouns, for instance Тот актёр - немец.
Этот мужчина - Тот мужчина
Эта женщина - Та женщина
Это письмо - То письмо
Эти кошки - Те кошки
My understanding is as follows.
The 'English for Russian speakers' course was made long ago, back when course creators couldn't add new lessons to the tree. So, they just couldn't add a lesson to explain articles, and instead they choose a word that was closest in meaning, because it was the best solution back in that time.
However, they don't think equating 'the' and 'это' is a good idea (it's was just lesser evil compared to not explaining articles at all), and that's why Russian for English speakers doesn't allow it.
In the case of nationalities, I am finding it difficult to distinguish between nouns ('A/the German') and adjectives ('[somebody or something] German') Which, for example, is немец? Duolingo's answers apparently do not differentiate the two. Is it possible to say that one set of endings indicates a noun and another an adjective?.
Often the noun has an ending "-ец" for a male person and "-ка" for a female. Немец/немка (a German), японец/японка (a Japanese), испанец/испанка (a Spaniard).
Sometimes the masculine form has an ending "-ин". Армянин/армянка (an Armenian), датчанин/датчанка (a Dane), англичанин/англичанка (an English).
There are other variations that you just need to remember like француз/француженка (a French), грек/гречанка (a Greek) , чех/чешка (a Czech), etc.
Dintinguishing them from the adjectives is pretty easy, since adjectives concerning nationalities pretty much all have the same ending: "-ский" for the masculine gender , "-ская" for the feminine gender and "-ское" for the neutral. If there are exceptions to this, I can't remember it from the top of my head. German - немецкий, Japanese - японский, Spanish - испанский, Armenian - армянский, Danish - датский, English - английский, French - французский, Greek - греческий, Czech - чешский and so on.
The only nationality where the noun and the adjective has the same form is, ironically enough, Russian. "Русский/русская" serve as both nouns and adjectives.