I've found your question from Google search as I was also looking in to the GetExtendedProperty method. I've since understood how it works and i'll share here in case other people also find your original question.
Definition.xml allows the developer to defined ServerSide properties that can later be retrieved via the GetExtendedProperty method. Example in Definition.xml:
<Property Name="test" Value="one" Type="String" />
If I wanted to use this property in for example a measure in the extension, I would then place it like so:
and it will display the string: one
The second argument would allow me to specify the Object id of the extension it self, but its an optional argument. Usage could be the following if the extension Object id would be: 'Server\CH03-12'