Words like "yo", "él", "usted" etc. is pretty much the default. Use those until you find a word that you remember requires "me", "se", "te", etc. These often mean that something is being done to the person involved.
"Me gusta el pastel" or "Me gustan los pasteles" ="The cake pleases me" or "The cakes please me" I suppose another way of writing it could be "El pastel gustame" but I've never used that form and I'm not a native spanish speaker so I could be wrong.
Other words that us "me"/"te"/"se"/etc. are the words for getting yourself up ("me levanto"), brushing your own teeth, brushing your own hair, and showering yourself ("me ducho") and pretty much anything else where you're doing something to yourself.
My answer should be correct, "I like this cake because it's big." The only difference between "it is" and "it's" is the latter is an abbreviation of the former. They are, therefore, the same in meaning. In Spanish, no article is needed at all. It is ridiculous for Duolingo to require one form over the other.