Extended Circles in Google Plus are, simply, the same concept as Facebook’s “friends of friends” feature – although there is a difference.
When you post content on Google Plus, you can choose to share it with Extended Circles instead of with a specific circle and instead of making it totally public. This means the post will be visible to anyone in one of your circles, and anyone in a circle of any of those people.
There are restrictions. For example, in the diagram above, your circles include Rosie, who will see your post. In Rosie’s circles are Mohammad, Peter, Petra, Susan and Terry. Assuming Rosie has not chosen to hide these people in her profile (from the list of those in her circles) they will probably be able to see your content too. Most likely, they will see your content if they look at your profile to see what you have posted. I don’t know at this time whether their stream will contain your post or how it will be flagged for them. Perhaps someone can provide me with a more detailed explanation of this.