X: I am very hard-working. Y: That you are. In other words: You are that. ("That" = you are hard-working) X: My country is very beautiful. Y: That it is. (It is that. "That" = your country is beautiful) ***** It means something like: Yes, I agree with THAT which you have just said. ***** Mona: I want to marry X. Mona's parents: We do not want you to marry X. Mona: But he is very nice. Mona's parents: That he is! But we still do not want you to marry him. We want you to marry someone who is very intelligent. And X is, well, not too intelligent.

I would love to see context.

sort of..