There is a little difference. Normal question would sound "Co čteš?" The sentence "Co to čteš?" shows more stress and some negative prejudice to the answer. Maybe it could be translated like "What the hell are you reading?" - it is not exact, but can give an impression about the difference.
or you could use "to" when refering to an exact thing - when you see someone reading something - you'd ask "Co to čteš?" - here "something" being "to", the question does not necessarily have to be meant negativly. "Co čteš?" is more vague - you might use this question asking someone what book they are currently reading (not dirrectly at the moment) or possibly what books do they like to reead in general
I wrote "what are you reading there?" and it was marked wrong. "What are you reading there?" can sound positive or negative in English depending on how they said. It seems like this is a viable translation for "co to čteš?". As a native English speaker when I hear "what is that you read?" or more usually "what is that you're reading?" (present continuous form), it comes across as negative and some sort of suspicion involved on the part or the questioner.
Co tam čteš?
Placing "tam" final is only possible in some very specific context. E.g., you are checking multiple sources, books, papers, etc. and you are asking What are you reading THERE? (as opposed to the other sources we are checking).
"Co to čteš?" is just stronger "Co čteš?". However, the emphasizing particle "to" must be in the second position.