It shows (slight) disbelief. Is like saying "oh really!", sometimes showing you're not so interested.
Is that so?
= And Is that right?
1. Is what you said correct? (With rising question intonation.) Henry: These are the ones we need. Andrew: Is that right? They don't look so good to me. Fred: Tom is the one who came in late. Rachel: Is that so? It looked like Bill to me.
2. That is what you say, but I do not believe you. (No rising question intonation. Slightly rude.) Mary: You are making a mess of this. Alice: Is that so? And I suppose that you're perfect? Bob: I found your performance to be weak in a number of places. Henry: Is that right? I suppose you could have done better?