Esto means This. Eso means That. But there is more...
There are ending changes depending on the gender and number of whatever you are referring to.
Esto can be Esta, Este, Estos or Estas.
Eso can be Esa, Ese, Esos, or Esas.
Esto and Eso are the gender neutral versions of this and that
EXAMPLE
Esto es emocionante ( This is exciting. We do not know if it is male or female...just exciting. so use the gender neutral esto.)
Eso es inteligente ( That is intelligent. Again, use neutral, because we do not know what is intelligent.)
It is easy to get Esto and Eso mixed up so I find it best to think like this:
Esto means this which is closer to me than that. Esto has a T in it. T stands for Touch. If this is close to me I can touch it.
Eso means that- which rhymes with splat. And eso and all of it's variations (plural and gender) look like little splats. See for yourself...