It literally means "This crazy one" and is used to refer to a person who is acting in a strange or unpredictable way.
Here are some examples of how you might use "este loco" in a sentence:
* ¡Este loco está hablando solo! (This crazy person is talking to himself!)
* No entiendo a este loco. Siempre hace cosas raras. (I don't understand this crazy person. He always does strange things.)
* Ese perro es un loco. ¡Siempre muerde! (That dog is crazy. He always bites!)
It's important to note that "loco" can be considered quite strong and is often used with a negative connotation. If you're talking about someone who is simply a bit eccentric, you might use a softer term like "raro" (strange) or "excéntrico" (eccentric) instead.