Can someone explain the difference between this sentence and "saya tahu buku itu"?
There is no difference in meaning.
'tahu' (to know) is the base word.
'mengetahui' = base word + 'me-i' suffix.
verbs with 'me-i' suffix are transitive.
a verb like this must be followed by a direct object in the sentence.
"Saya tahu" = "I know"
"Saya mengetahui …." = "I know … "
The first sentence is okay.
The second sentence is not okay, it misses an object.
You must use something where the dots are.