Isso = this or that?
I learned (not from Duolingo) that "isso" means "that" and "isto" means "this". I also know that colloquially "isso" is used for both "this" and "that". However, in numerous lessons Duolingo has not accepted the translation "that" and has instead said the correct translation is "this" even when the definition they provide is "that". Am I missing something or is Duolingo just wrong?
Demonstrative pronouns are difficult because, while they have the idea of locating the speaker and the person being spoken to in space, they can be used more abstractly. Let's stick to the concrete meaning and not more abstract ideas like in the movie title "O Que É Isso, Companheiro?" or the song "Que País é Esse?"
This is the correct usage:
"isto aqui" (this here near me), "isso aí" (that there near you), "aquilo lá" (that over there) Here is an English reference: http://www.easyportuguese.com/Portuguese-Lessons/Demonstrative-Pronouns.html
So yes, you are right. It sounds like they have some beta issues.