Learn Spanish (Spain): Este sitio es muy tranquilo.

It is a very common mix-up! Because sitio is a masculine word, the matching word for "this" is este. The word esto does exist, but it is only used for a general idea, a situation, or an unknown object. You never put esto directly in front of a noun.

Could I say Este sitio está muy tranquilo instead?

Yes, but it changes the meaning. Using es (from the verb ser) means being quiet is a permanent characteristic of this place. If you use está (from the verb estar), it means the place happens to be quiet right now at this specific moment, perhaps unusually so.

Is there a difference between sitio and lugar?

They both mean "place" and are very often interchangeable. Sitio is generally a bit more informal and usually refers to a specific physical spot, space, or venue. Lugar can sound slightly more formal or refer to a broader area. In casual conversation, you will hear sitio very frequently.

In English, "tranquil" sounds very formal. Is tranquilo also formal in Spanish?

Not at all! While they look and sound similar, tranquilo is the standard, everyday Spanish word for "quiet", "calm", or "peaceful". You will use it constantly to describe places, situations, and even relaxed people.