It typically just refers to a singular or specific that. Could be "that thing", "that concept", "that political party" in this case "that (opinion)". Whereas tiu is more broad in scope. "Hodiaux estas malvarma. Mi malsxatas tiun." Or in angla you might say "The government is corrupt. That makes me unhappy." Sort of more describing a situation.
I'm still working my mind around this so hopefully someone can add even more.
I'm not quite sure about all the differences, but I DO know that any time you want to spexify a specific object/thing/noun etc., you must use "tiu". For example:
Tiu libro = that book Tiu tago = that day
I believe that tiu wasn't used in this case because usually when you are using "that" alone, you aren't refering to a specific thing. But even if you are, it really depends on context. Think of tiu as an answer to kiu. If you wanted to use tiu in this case, you would be answering the question, "which (kiu) is his opinion?" The answer would be, "that specific opinion out of all the opinions (tiu) is his opinion.
But as you can see, this sentence is not trying to specify anything, it is just making a general statement.
Another example would be with "kion/kiun vi volas". "Kion vi volas" means "what do you want", as in "you're annoying me, what do you want", whereas "kiun vi volas" means "what/which do you want", as in "which one do you want to buy, because you can only get one".
I'm sorry that was so long, but I hope that made sense. As always, if I'm wrong anyone please feel free to challenge or correct me. Ĝis.
It is referring to something concrete here. It is still also correct to specify "Tiu (opinio) estas lia opinio" which implies "That opinion is his opinion".
This is a response though to something already being talked about.
"Li pensas ke mi malbonas"
"Tio estas lia opinio"