Prefiro este formato.

Portuguese often leaves out the subject pronoun when the verb already makes the subject clear.
Prefiro already means I prefer, so Prefiro este formato is completely natural.

You can still say Eu prefiro este formato, but that usually adds emphasis, contrast, or clarity, for example:

• Eu prefiro este formato, mas ela não.
• Eu prefiro este, não aquele.

So the version without eu is normal and very common.

Prefiro is the 1st person singular present indicative of the verb preferir.

That means it is the form used for I prefer.

It can express:

• a general preference: Prefiro café sem açúcar.
• a current choice: Prefiro este formato.

So it works a lot like English present simple in this kind of sentence.

It is slightly irregular.

Some present-tense forms change the stem vowel:

• eu prefiro
• tu preferes
• ele/ela prefere
• nós preferimos
• vocês preferem
• eles/elas preferem

A useful thing to notice is that nós preferimos has the same form in the present and the past simple, so context tells you which one it is.

Este is a demonstrative adjective meaning this, and it agrees with formato, which is masculine singular.

So:

• este formato = this format
• esta opção = this option

Why not the others?

• esse usually means something closer to that in European Portuguese, often nearer the listener or less close to the speaker
• isto means this, but it is a pronoun, not an adjective, so it cannot go directly before a noun

So:

• Isto é melhor. = This is better.
• Este formato é melhor. = This format is better.

Not in this sentence.

If you only mention the thing you prefer, you simply say:

• Prefiro este formato.

If you mention both options, Portuguese often uses a to introduce the second one:

• Prefiro este formato ao outro.
• Prefiro este formato a esse.

Notice:

• a + o = ao

So Prefiro este formato ao outro means I prefer this format to the other one.

Because este already works as the determiner for the noun.

In standard Portuguese, you normally say:

• este formato
• essa ideia
• aquele livro

not:

• o este formato

So este already does the job that this does in English.

Formato usually refers to format, layout, structure, or the way something is presented.

Forma is broader and can mean:

• shape
• form
• manner
• way

So if you are talking about a document, file type, presentation style, questionnaire layout, or similar, formato is the natural word.

Examples:

• Prefiro este formato de ficheiro.
• Prefiro este formato de apresentação.

A rough European Portuguese pronunciation would be:

pruh-FEE-roo ESH-t(uh) fur-MAH-too

A few important points:

• prefiro has the stress on fi
• este often sounds like esht or esh-tuh in European Portuguese
• the s in este sounds like sh because it comes before t
• the final o in prefiro and formato is usually pronounced like a very short u
• unstressed vowels are often reduced in European Portuguese, more than in Brazilian Portuguese

So the sentence may sound more compressed than an English speaker expects.

Yes, but it changes the tone.

• Prefiro este formato = direct, straightforward, normal statement
• Preferia este formato = softer, more tentative, often like I’d prefer this format

So if you are simply stating your preference, Prefiro este formato is the best match.

If you want to sound more polite or less direct, especially in conversation, Preferia este formato can work very well.