I'm afaraid that this is an issue of the English language. This and that have become interchangeable, so we get a gazillion reports for it. I do think that most courses now include both (at least when it comes to translating a sentence to English) of them. ^.^
How does this mean "This is upstairs"? Wouldn't that be a different word entirely?
There is no different word for "upstairs" in Greek. Πάνω or πάνω όροφος is what we use to say "upstairs".