Learn Italian: Il pensiero è ciò che è reale.

Cosa (or che cosa) is used to ask a question, like "Cosa fai?" (What are you doing?). In this sentence, "what" isn't a question word; it means "that which" or "the thing that." For this kind of "what," you must use a compound relative pronoun like ciò che or quello che.

Could I say "...è quello che è reale" instead?

Yes, absolutely! Ciò che and quello che mean exactly the same thing ("what" or "that which") and are completely interchangeable. Ciò che sounds slightly more formal and written, which perfectly fits the philosophical tone of a sentence about "thought" and "reality."

The English translation is just "Thought is...", so why does the Italian add Il (Il pensiero)?

In English, we drop words like "the" when talking about abstract concepts or general categories (like "thought," "love," or "life"). In Italian, you still need to use the definite article for these broad concepts. So, "thought" in a general sense must be il pensiero.

Since reale ends in an "e", how do we know its gender in this sentence?