Let's look: "It house is big and expensive." (What???) Or, on the other hand: "That house is big and expensive." (Much better) When "det" is not accompanied by a noun, it means "it", because it IS the noun you're talking about. When it precedes a noun, it is specifying something about the noun.
I was commenting on this to a Danish person just the other day. I very often find that when I'm trying to understand the real meaning and intent of a Danish phrase in English, it is better to set aside my American English and instead, think of 19th century British English, like something by Dickens, Austen or the Bronte sisters. And yes indeed, that dear little house could be quite dear. ;-)