In my own words "Measurement is the act of determining a target's size, the length, capacity, weight, or other aspect. There are a number terms similar to measure but which vary according to the purpose (such as “weight,” “calculate,” and “quantify.”) In general, measurement can be understood by the word instrumentation."
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.
