The Second Extension drop-down list becomes available only if the item chosen in the Extension drop-down list requires the addition of a second extension in order to form a usable expression element.
Suppose you are referencing the nominal value of the X location axis of a dimension named "D1". You would:
Choose D1 from the ID drop-down list.
Select X from the Extension drop-down list.
Select Nom from the Second Extension drop-down list.