Learn Russian: Это мой старый знакомый.

In Russian, some words for people are actually adjectives acting as nouns. Знакомый literally means "familiar," but is used as the noun "acquaintance." Because it is technically an adjective, it changes its endings exactly like a regular adjective when you use it in different cases.

Since the rest of the sentence is masculine, why do we use the neuter Это at the start?

Here, Это is acting as the phrase "This is." When you introduce someone or something with "This is..." or "These are...", you always use the fixed neuter form Это, no matter the gender or number of the noun. You would only use the masculine Этот if you were saying "This acquaintance" (Этот знакомый).

How would this sentence change if I were talking about a female acquaintance?

You would change the possessive pronoun, the adjective, and the noun to their feminine forms: Это моя старая знакомая. Notice that the introductory word Это stays exactly the same!

What is the difference between знакомый and друг?

A друг is a close friend, while a знакомый is just an acquaintance or someone you know casually. Russians generally reserve the word друг for much closer, deeper relationships than English speakers do with the word "friend," making знакомый a very common and useful word in everyday speech.