Here is a site which says "esse/esta" = "that"

[http://www.easyportuguese.com/Portuguese-Lessons/Demonstrative-Pronouns.html]

Here is a site which says "esse/esta" = "that/this"

[http://streetsmartbrazil.com/blog/20121221/difference-between-este-and-esse-portuguese]

And here is a site which says "esse/esta" = "this"

[http://www.sonia-portuguese.com/text/pronouns.htm]

So... who knows, Duolingo certainly uses it for both this/that. Maybe the best explanation is the street smart brazil site. There may also be a difference between European and Brazilian Portuguese which would make things less clear.

It can be both in spoken language....