What is a demonstrative (ism ishara)?

Arabic demonstratives — هَٰذَا (this), ذَٰلِكَ (that), هَٰؤُلَاءِ (these) — are nouns in their own right, and they are mabni: their ending never changes whatever the sentence does. They agree in gender and number with what they point at, and they carry distance: the opening هـ points near, the ك of ذَٰلِكَ points far. When Surat al-Baqara opens ذَٰلِكَ ٱلْكِتَٰبُ, the far word honours the Book: “that (exalted) Book”. The demonstratives for near and far are used more than 1,060 times in the Quran — one or two on nearly every page of the mushaf.

The opening هَا is a separate particle of attention, not part of the demonstrative — which is why ذَا and هَذَا are both correct. The ك on the far forms is not part of it either: it addresses the listener. Only ذَاكَ and تِيكَ may then take the ل of distance, giving ذَلِكَ and تِلْكَ.

The word إِشَارَة (ishara) in everyday Arabic means a gesture — pointing at something with the hand.

أَشَارَ إِلَيْهِ (ashara ilayhi) — “he pointed at him”

As a grammatical term it means an ism that does the pointing in words instead of with the hand.

How do I know whether هذا الكتاب means “this book” or “this is the book”?

هَٰذَا + definite noun is normally the phrase “this book”; with an INDEFINITE noun (هَٰذَا كِتَابٌ) it is a complete sentence. A pronoun of separation (هَٰذَا هُوَ الْكِتَابُ) or context marks the sentence reading with a definite noun.