Learn Spanish (Latin America): Aquello es una montaña.

When you point at an unknown object to identify what it is, you use a neuter pronoun (esto, eso, or aquello). You are basically saying, 'That thing over there is a mountain.' If you used the feminine aquella, it would sound like you are singling one out from a group of already-known feminine objects, like 'That one is a mountain.'

What is the difference between eso and aquello? Both usually translate to 'that'.

It comes down to physical distance. Eso means 'that' (something closer to the listener, or just a short distance away). Aquello means 'that over there' (something far away from both the speaker and the listener). Since you usually look at a mountain from a distance, aquello is the perfect choice.

I learned that the verb estar is used for physical locations. Why do we use es (from the verb ser) for a mountain here?

It is true that estar is used to talk about where something is located (for example, La montaña está lejos means 'The mountain is far away'). However, in this sentence, you are not talking about its location. You are identifying what the object is. Whenever you are identifying what something is, you always use ser.