In Modern English, you’s the third-person pronouns. It’s usually grammatically singular, and has historically only been used for the third person in the affirmative and negative cases, but in many modern dialects, is now used for both third person and all other cases. The exceptions are official titles like Mr. and Ms., which always use you as the third person. Of course, you can use it with a preposition to act as a “in” object.
“You’re” is also a shortened form of you. Like you, it’s grammatically singular, and is used as a verb (you’re talking). However, unlike you, it isn’t always necessary to have the object follow the verb. So “You’re talking” are both valid ways of saying “I’m”.
“You’re” is also commonly used in address. However, in informal speech, it’s usually used with “I” as the subject. So “You’re talking” and “My friend is talking” are both valid ways of addressing the person talking. However, it’s still informal. You wouldn’t say “Your friend is calling you” or “Your friend is arguing with you”. And “you’re” is never used to introduce a person to someone else.
“You” is also commonly used in subject when describing an action. For example, you can describe a car’s movement in the road by using you instead of “It”. “It” describes the thing being moved. “You” describes the person moving it.
“You” is also the reflexive pronoun. That is, it tells us when something occurs as a result of someone doing something, such as when they are walking, eating, crying etc. The “you” here is more like a command rather than a description. So “You’re walking” or “Your friend is walking” are just two examples of this type of Reflexive Pronunciation.
So “You” is clearly the preferred spelling when addressing someone. And there are still lots of exceptions, just like there are lots of spelling rules. Just keep in mind that it’s still always respectful to spell “you” correctly.
However, if you need to address more than one person at a time, then it might make sense to use “he” or “she.” It can even be handy for formal speech. For example: If you’re introducing somebody to your family, you might say “John and Mary are here.” Or if you want to address a colleague you’re meeting for the first time, you might say “Bill and Trina are here.” Then you can use “they” for the next person. And so on.
Remember that “you” is used to refer to a person and “he” is used to refer to a thing. So, for example: “You are going to have a very good workout today.” “Trina has just finished her workout.” “John and Jane are here to help you with your exercises.” And so on.
Of course, when you’re talking about babies, “you” is still the appropriate spelling. “Your” is used to refer to the parent, and “he” is used to describe either the baby or the parent. However, it’s a little harder to do in informal speech. So if you have to address more than one person at a time, you might want to switch back to using “you” and “he” to avoid confusion. And that’s all there is to it!