In english, you can form a question just with intonation - She works in this city? is just as common as "Does she work in this city?"
I agree that either ought to be acceptable and both are used altenatively.
I meant the other way: Does she work in THAT city. How do I say that? I thought nesta could be "in this" and "in that" both?
When it's about places, nesTa is always in this. Naquela is always in that.
The doubt reamains with "nesSa", which can be this or that. It refers to the place where the listener is.