Thesis statement: The Death of Ivan Ilych presents a strong example of realism. Topic: Realism in the death of Ivan IIych. Textual Evidence: Ivan Ilych's life had been most simple and most ordinary and therefore most terrible. Explanation: Thesis statement basically gives the scope, main idea or purpose of the essay.
The prounoun "that" is used as a demonstrative pronoun in your sentence because it is used to demonstrate, or indicate something. In your sentence, that indicates which horse is your favorite.