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In the sentences below:

  1. 'It's only a suggestion.'

  2. 'That's only a suggestion.'

I was told by most people that they could be used interchangeably, but I believe they exist for some reason that yet to be found out.

How do you differentiate them?

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    Both that and it are used here to refer to the same thing. So it is interchangeable for this example.
    – NVZ
    Commented Jul 11, 2017 at 10:11
  • 1
    Related on ELU
    – Mohd Zulkanien Sarbini
    Commented Jul 11, 2017 at 10:37

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You can use either "it" or "that" to refer to the thing that has just been written or talked about. The usage of the former is more common; however, the latter is more emphatic.

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