English can be a very imprecise language. When talking with someone, if you describe an object, you can specify exactly what you are talking about by using very descriptive words like its name and colors and position, or it is equally as valid to use a word like "That".
If you use "That" frequently in such a situation... I hate you.
A factory burned in a fire
One of the survivors, a worker from the factory, goes home to his wife “Honey, there was a fire, the factory burned down and many of my coworkers died”
“That’s horrible!” She replied
“Tragic... The company is insuring the families of the deceased with hundreds of thousands of dollars”
“How did you survive?” The wife asked.
“I stepped outside for a smoke when it caught fire” said the husband, to which the wife replied “This is why I’ve told you a million times to quit smoking!”