"It is a chair."
Translation:Es ist ein Stuhl.
The sequence "it is" has the two hints es ist and ist es because the order can change depending on whether or not there is something before the verb.
For example, "It is cold" is Es ist kalt but "It is cold today" is Heute ist es kalt -- if there is heute before the verb ist, there is no room for the es and so that has to come after the verb.
But in this sentence, "It is" can only be es ist.
Remember that hints are global and not sentence specific -- some of the hints may not apply to the current sentence.
Generally, the topmost hint will be a correct option for the given sentence as the system tries to sort the hints it displays that way, but it can get confused so even the topmost one is not 100% reliable.
You would usually use a personal pronoun such as "it" when referring back to something that you have been talking to already, but a demonstrative pronoun such as "this" to refer to something new to the conversation.
"This is my favourite piece of furniture. It is a chair."
Dies ist mein Lieblingsmöbelstück. Es ist ein Stuhl.
another correct german word for chair is "Sessel"
In Austria, yes.
In Germany, a Sessel is an armchair, not a chair.
This course teaches standard German as spoken in Germany; divergent word usage from Austria or Switzerland or regionalisms from Germany are generally not accepted.
"Sessel" is a correct german word
Of course. But it means "armchair", not "chair".
Have a look at the pictures in https://www.duden.de/rechtschreibung/Sessel -- the first meaning, with a picture of an armchair, is the general one; the second one, with a picture of a chair, is marked "österreichisch" and is "translated" into the general German word Stuhl.
Since you're asked to translate the word "chair" here, nor "armchair", Sessel is not appropriate.