Learn Portuguese (Portugal): Isso é o carro e isto é a mesa.

Words like isto and isso are neuter demonstratives. You use them when pointing to a general object or when you are just identifying something by saying "This is..." or "That is...". They do not change to match the gender of the noun that comes after the verb. If you wanted to say "that car" rather than "that is the car", you would use the masculine word esse directly next to the noun: esse carro.

What is the difference between isto and isso in this sentence?

It comes down to physical distance! Isto means "this" and is used for something very close to the speaker, like a table they are sitting at. Isso means "that" and is used for something a bit further away, or something close to the person they are talking to, like the car.

Why do we use é instead of está?

We use é (from the verb ser) because we are defining or identifying what these objects are. In Portuguese, ser is used for permanent identities and facts, while estar is used for temporary states or locations. Since a car is always a car, we use ser.

How do we know to use o before carro and a before mesa?