The pronouns "isto", "isso", "aquilo"

The equivalents of English pronouns "this (or it)" and "that" are represented in Portuguese by three pronouns. "isto" may be used straight away for "this(or it)". example: isto é um livro - This is a book.
However "that" is somewhat graded in Portuguese. Something which is at a reasonable distance, may be expressed by "isso". example: isso é uma uva - That is a grape.
Something which is at a far distance is expressed by "aquilo". example: aquilo é uma cidade - There(far) is a city.