There's a general rule: If the antecedent is an object, we use "it" more often. If the antecedent is an idea or a concept, we use "that" more often. If you're asking someone to react to something you've just said, "that" is the natural choice, but "it" would sound more natural is in a construction like this: Does it make sense to arrive at the airport three hours ahead of time? Here, we're using "it" as an empty subject-- it's essentially just holding the place of the subject. But when you're asking for reaction, "that" is more natural: I've heard you should get to the airport three hours before your flight. Does that make sense?

Nobody can tell you which one to say. The choice of "it", "this", or "that" reflects your internal cerebral activity rather than external reality. Since nobody knows how you are thinking, nobody can tell you which one to say. When you say "this", you are thinking of the thing, whatever it may be, as being identifiable and close to you in some sense. Metaphorically, it is as if you could hold the thing in your hand. When you say "that", you are thinking of the thing as being identifiable and removed from you. It is as if you could point towards the thing. When you say "it", you are simply thinking of the thing as being identifiable.

Here is a simple, clear explanation. "it" refers to an idea which is being introduced following; "this" or "that" refers back to a previously mentioned word, phrase or idea