contrast.este-ese-aquel
Este, ese, aquel: choosing the distance
Este = near me; ese = near you or just mentioned; aquel = far from both, or remote in time. In practice ese covers most middle ground and aquel is fading in speech.
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Explanation
Spanish demonstratives encode three distances, anchored to the two people talking. Este is near the speaker ('this one, here by me'), ese is near the listener or something just mentioned ('that one, by you'), and aquel is far from both, or remote in time ('that one over there / back then'). They agree in gender and number: este/esta/estos/estas, and so on.
The system works in space and in time. Spatial: este de acá, ese que tenés vos, aquel del fondo. Temporal: esta semana ('this week'), ese día (anaphoric — 'the day we mentioned'), aquellos tiempos ('those days', nostalgic). Ese is also the natural choice for picking up something already named in the conversation.
In everyday speech many speakers really run a two-way system, este/ese, and keep aquel for distance with a touch of style or nostalgia. There are also neuter forms — esto, eso, aquello — for ideas and unnamed situations rather than specific nouns: esto no me gusta ('I don't like this whole thing'), ¿qué es eso?
Examples
I don't want this one; give me that one in the back.
Region: global
Those days were something else.
Region: global
This one's mine, that one's yours, and that one over there is Ana's.