"This is the fourth book that I am reading today."
Translation:זה הספר הרביעי שאני קוראת היום.
The other correct translation is זהו הספר הרביעי שאני קוראת היום. What does זהו mean and how is it different from זה?
They are the same in this context and most others. The only difference I think is that זה can be used to mean something more general like "things" or "the situation", whereas זהו always refers to something specific and grammatically singular and masculine, with the feminine version being זוהי and the plural אלו. But זה can be used in the same way, as in this sentence.
There's a word I hear very frequently with similar pronunciation to זהו, which means "that's it", "that's all", "nothing more". Are these two words in fact the same word?
True! Good point. You can use זהו to say "that's it" or also "there you go", something like that. In my opinion it's a shortened version of the expression "זהו זה", which can be translated literally, "that's it" or "that's that". The full version "זהו זה" is also in use.