'That' is PIE *tod — the ancestral pointing word behind 'the,' 'this,' 'there,' 'then,' and 'than.'
Used to identify a specific person or thing observed or heard by the speaker, or to refer to something already mentioned or assumed known.
From Old English 'þæt' (that, the neuter demonstrative pronoun and conjunction), from Proto-Germanic *þat, from PIE *tód — the neuter form of the demonstrative base *tó- (that, the one there). This is the unmarked distal demonstrative: the default pointing word. From this single PIE root descended not only English 'that' but also 'the,' 'there,' 'then,' 'than,' 'thus,' and 'this' (a separate but related form). Old English 'þæt' was simultaneously a pronoun ('give me that'), a demonstrative determiner ('that man'), a relative pronoun ('the man that came'), and a conjunction ('I know that it is true') — functions it retains unchanged today
The word 'that' serves more grammatical functions than almost any other English word: demonstrative determiner ('that book'), demonstrative pronoun ('I saw that'), relative pronoun ('the man that spoke'), conjunction ('I know that you came'), and adverb ('not that far'). Five distinct grammatical roles, all from one PIE pointing word.