[chryuop]

Junlove, even tho it seems in Japan they don't divide them, whatever text book you buy in English they create a division to help understand. They group them in 3 big families: KO-SO-A, this way you know which kind to use.
The differences are as follow:
KO is used for something you are referring to which is close to the person speaking.
SO is used for something you are referring to which is close to the person listening.
A is used for something you are referring to which is far from both speaker and listener.
KONO, SONO and ANO are demonstrative adjectives (or better this way they are called in latin origin languages) and they require a noun following them.
KORE, SORE and ARE are pronouns, thus they are used alone substituting a noun.
KOKO, SOKO and ASOKO are adverbs which show a place (here and there).

So going back to your example. Saying kono hana ha kirei desu it means the flower is close (if not in the hand) of the person speaking. So if I say kono hana ha kirei desu. sore ha kirei deha arimasen it means this flower (close to the speaker) is pretty, that one (close to the listener) isn't pretty.
KORE, SORE and ARE are also used for the English "it" when while speaking you are referring to something mentioned before.
Hope it is clear.