C'est une jolie robe. -- It's (that's) a nice dress.
Tu aimes mon pull? - Oui, il est beau. -- Do you like my sweater? - Yes, it is nice.

On the surface, the English "it" is once translated as ce and then as il. The difference is to realize that in the first example, it's a general "it". Sometimes it helps to try and replace it by "that." In the first sentence it doesn't make much of a difference whether you say "it's a nice dress" or "that's a nice dress".

In the second example, though, there's a subtle difference. The "it" isn't general. Replacing it by "that" gives the sentence a slightly different connotation. "Do you like my sweater? - Yes, that is nice." doesn't sound quite right in English. Take this as a hint to use the specific pronoun il.

Possibly Jacob would have expected the first sentence to be "Elle est une jolie robe". But that's not allowed in French, even if the dress has already been mentioned, and you would use "it" in English.

This is the point that confuses most English speakers. If you look at the lesson again, you'll see that the first part is about saying "It is a [noun]". In this case you must use "c'est". The second part is about saying "It is [adjective]". Only in the latter case does it depend on whether the object is "specific" or not. 

I don't think the difference between "c'est" and "il est" is comparable to the difference between "that's" and "it's". Both these examples from the lesson use "it's" in the translation:

Tu aimes la soupe? - Oui, elle est délicieuse!

Do you like the soup? - Yes, it's delicious!

Tu aimes la soupe? - Oui, c'est réconfortant!

Do you like soup? -Yes, it's comforting!

This is a complete mess!