We use the word this to point to something near us. Am I right? But why does everybody say: this is fine, this is cool, this is awesome without referring to something. Why not just say: it's fine, it's cool, it's awesome?
The difference is the use of a deictic expression:
A deictic expression or deixis is a word or phrase (such as this, that, these, those, now, then, here) that points to the time, place, or situation in which a speaker is speaking. Deixis is expressed in English by way of personal pronouns, demonstratives, adverbs, and tense. The term's etymology comes from the Greek, meaning "pointing" or "show," and it's pronounced "DIKE-tik."
It's amazing. The pronoun it can refer to something you are talking about or a statement you make regarding some fact or situation or feeling, etc.. "It is amazing that I passed my exam. It is amazing the sun shines every day."
That's amazing. That is deictic. It refers to something your interlocutor has said or something someone is pointing out in reality.
Person One: I just received a grade (or mark) of 100 on my math exam!
Person Two: That's amazing. Good for you.
That= the interlocutor received a grade of 100. That refers to what your interlocutor has said, not what you have said.
This and that are signals that some speech that preceded their use is being referred to. The pronoun it is just for general statements from a speaker, not for a speaker's reaction to someone else's speech or even to refer to their own previous speech. A speaker's reaction to another's speech uses that. (and can also use this to refer to the same speaker's previous speech or ideas.).
Person One: I told you I didn't like that report you wrote. I told you it was not acceptable. What are you going to do about this?