The extension is the distance measured from top of seattube collar (upper end of the seat tube) to middle of the saddle rails in your normal pedaling position.

The maximum insertion is the frame-limited  length/depth inside your seattube, to which you can possibly insert a seatpost before hitting a stopping obstacle. It's solely dependend on the frame design.
The maximum insertion is typically limited by a seattube bend or a pivot axle going through the seattube. Determine the max insertion by using a long enough seatpost (e.g. an old rigid seatpost) and by carefully inserting it until you feel resistance.

The buffer is an optional safety margin for your maximum insertion depth. If you are not sure whether you measured the maximum insertion correctly, or if you want to add some margin for cable routing, you can add it here.

Reserve up/down indicates how much space you still have for dropping the post further into the seattube or extending it longer before either hitting the conact point or exceeding the minmum insert of the post.