When two identical vowels occur together, in normal speech they are pronounced as one: "Yo he elegido esto" becomes "Yo elegido esto" or "el libro de español" sounds like "el libro despañol." When young Spanish speakers are learning to read, they pronounce each vowel, syllable, or word separately.
"Esto" is neuter. It doesn't refer to any particular thing; it just means "this." If you have a masculine or feminine thing in mine, you'd use "este" or "esta" to mean "this one." If referring to a car, you'd say, "Yo he elegido este" (I have chosen this one). If referring to a necktie, you'd say, "Yo he elegido esta" (I have chosen this one).