"They are different people."
Translation:Jsou to jiné osoby.
"Jsou to jine osoby" sounds to me like "Those are different people". Shouldn't "They are different people" be translated to "Oni jsou jine osoby"?
Demonstrative "to" is often used instead of personal pronouns.
"Oni jsou jine osoby" sounds unnatural here, it is necessary to use "to".
This is this very common "To je..." "Je to...", "To jsou... ", "Jsout to..." type of sentence. It is always TO and it stands for anything indeterminate you are pointing to.
"Lidé" are masculine animate. The gender endings must match - so you need to use "jiní".
Are "osoby" and "Lide" interchangeable or is their a distinction in meaning? I mean other than them being a different gender.
As I commented several time, the primary meaning of člověk/lidé is (hu)man/humans(men) and the primary meaning of osoba/osoby is person/persons. But the actual usage is different between these English and Czech and there is often preference for "persons" in English where Czech uses lidé.