I'll tell you what this is all about, because that makes it a lot easier to understand instead of understanding some unmotivated "principles".
Let's say you have a class A, and it is used by 5 users, and has two subclasses. Now one of the five users decides they need class A to behave slightly different, so he modifies the class.
Bummer. We now have four users and two subclasses all with broken behaviour because they didn't want that change. When a class is used like this, you can't just change it. It is closed. (Of course you can change it but you would have to go through all their uses first and make sure everything works as it should, which is a lot of work).
So that one user decides to instead make a subclass, and implement his changed behaviour in the subclasses. That's better because it doesn't break anyone else's code. Still, you have one more subclass. And having more subclasses isn't good, it increases maintenance cost.
Better is to have a class that is extensible. That can be made to do what I want (instead what you want) by leaving the class unchanged, but making it possible to change its behaviour from the outside.
As a very obvious example, if you have a class "Button" putting a button on the screen, you don't want to make a subclass "GreenButton", "RedButton" and "BlueButton" for when you want a green, red or blue button. He want the button to have a property "color" that can be used to make it display any color you want, without changing the class, and without subclassing.
If you planned ahead, your class is already ready to be modified this way (on the other hand there is the "You Ain't Gonna Need It" principle which says you shouldn't add capabilities to your class that you aren't going to need). If you didn't plan ahead, you add the ability to be extended to the class, making sure that the behaviour is unchanged if that particular ability is not needed.
As in everything, use common sense. If you can extend a class so much that it is unrecognisable depending on who uses it, then perhaps you are doing something wrong. And if you are the creator and also the only user of a class, do what you like. Until you are not the only user anymore.