1) Narration is the process of conveying someone's message or sequence of events to another person, usually in chronological order. This can be done through direct or indirect speech.
2) In indirect speech, the message is conveyed in the second person with changes to tense, pronouns, and other elements.
3) When converting direct to indirect speech, the deictic element (expressions that derive meaning from context) is important but often overlooked. The use of "that" helps coordinate the reporting and reported speech in a deictic sense.