grammar.pronouns.neuter
Neuter pronouns: esto, eso, aquello, ello, lo
Esto, eso, aquello refer to ideas, situations, or unnamed things — never to a specific noun, which would have gender.
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Explanation
Spanish nouns all have gender, so when you point at something with no noun yet — an idea, a situation, a whole statement — you use the neuter forms esto, eso, aquello: ¿qué es esto?, eso no me gusta ('I don't like that [situation]'), todo aquello quedó atrás. They never replace a specific gendered noun (for that you'd use este/esta, etc.).
The neuter article lo turns adjectives and clauses into abstract nouns: lo importante ('the important thing'), lo bueno y lo malo, lo de ayer ('that business from yesterday'), lo que dijiste ('what you said'). This lo is one of the most useful little words in Spanish.
Ello is a formal, mostly written neuter pronoun meaning 'it / that matter': por ello ('for that reason'), todo ello. In everyday speech eso covers its ground. Rule of thumb: if there's a concrete noun with gender, don't use the neuter; if you're pointing at an idea, do.
Examples
That's exactly what I think.
Region: global
The hard part is starting.
Region: global
What you said made me think; the hard part is changing.