Translation:It is a dog.
In English, words like this and that can be used in two grammatical ways. You can say "that" like a noun as in "That's funny" or you can that as a modifier like an adjective as in "That joke is funny." In other languages, especially Asian languages, there are different words for these two different uses. 그것 is the noun form and 그 is the adjective form. The tips explain this.
I am surprised Duolingo is translating 그것 as "that". I would tend to say it was "this" since it denotes something close to both listener and speaker. Granted, even in English we use "this"and "that" pretty much interchangeably when referring to something close by, and rely on context to provide distinction to the listener. But then again, we don't have special markers that distinguish between close, far, and very far ....