"That" is used to link the subject to a phrase that describes that describes a subject. So in this case, the subject is "the assumption", and the description of that assumption is everything that comes after the word "that". So what's an easier way to think of this? The word "that" functions similarly to the way "的" might in Chinese (though the word order works differently: in Chinese the description comes before the subject you're talking about, in English the description comes after). For example: Eng: That woman that speaks Chinese is very beautiful. 中文：那个会说中文的女人很漂亮 。 Hope that helps! Let me know if you have any questions.