Translation:That is exactly what I am offering you.
Use "ciò" to refer to a remark or statement somebody has made:
Person A: Makes a statement bla bla bla.
Person B: That is true but . . = Ciò e vero ma . . .
Use "quello" (this) and "questo" (that) to refer to everything else, objects, persons, animals, etcetera:
I want that car. = Voglio quella macchina
"Ciò" and "quello/questo" are not interchangeable when used like this.
But "ciò che" and "quel che" are fully interchangeable. Both mean "this that/what" or "all that/what", - but in English parts of this is often omitted and left implied.
I don't agree with (this) what you just said = Non sono d'accordo con ciò che hai appena detto
All (that) I know . . . = Tutto quello che so . . .
Comment modified after reading Isola's comment. In modern English, at least in British English, "that which" is rarely used, "what" being to my ears much more natural, and the standard translation of "quello che" in this context, and its equivalents in other romance languages, such as "ce que" (fr), "lo que" (sp), "o que" (pt).
OK, and in my mind I do the same, but only in my mind (or in my notebook), and then I convert it into normal, natural English.
I think we need to remember that many people do these courses in reverse (the best way, imho, or even better L2 > L3), and I think it is important that they don't get the idea that literal translations such as this are what people would normally say. This particular use of "what" is a standard part of English teaching for foreigners (and to be honest I explain it to students in terms of "that which"), and it can cause students a few problems (they often want to simply say "that"), so I personally think it better that we use natural language on both sides. :)
Touché, it's always dangerous making absolute statements where English is concerned, and it seems I was wrong to call it ungrammatical. But this is what it says in my EFL teacher's bible, Practical English Usage, by Michael Swan (concerning British English):
"that which used to be used in the same way as what ... (but) is very unusual in modern English:
We have that which we need. (Modern English: We have what we need)"
I have to say it sounds very strange to me and I would certainly advise my students against using it, but perhaps its use is more common in other parts of the English-speaking world. I can't find much about it in the internet, but these may interest you:
"That which we call a rose by any other name would smell as sweet" (Shakespeare). Though "that which" is not used in everyday speech, it shows up occasionally in poetry, biblical translations, and older texts. It is also frequently used in mathematical proofs. (... for what it's worth...)
I understand and agree with the points that you all are making. For me, personally, though, when I am translating a sentence into English for Duolingo, it's to understand Italian better, which is why I favor literal translations over more commonly used or correct English. If I was doing a professional job of translating something from Italian into English, I would favor the phrases that are more understandable in the target language. People on this site tend to favor one way of translating over the other, but I don't think that makes either way wrong.
In some cases "that" and "which" are interchangeable, but not here, I think. "ciò" is a demonstrative pronoun meaning "this/that", referring to something that has just been said. We can also use "which" to refer to something just said, and your sentence is of course perfect English, but "which" here is a relative pronoun (aka "sentential which"), and the meaning would be slightly different. In Italian I think it would be "il che":
"Il che è esattamente quello che vi sto offrendo"