Extract using Direction=Constant does this:
From the selected faces normal direction it calculates an average direction and a centroid for this selection. Now it copies the selected surface and moves the duplicated surface in that averaged direction. The distance between centroid of duplicated surface and centroid of the source selection is exactly equal to the Offset value. Same happens if you restrict the movement to a certain axis using XAxis, YAxis or ZAxis as Direction.

This means the new surface isn't parallel in 3D to the source. E.g if you do this on a sphere with all but a pole being selected the new surface might even intersect the source sphere.
Instead using Direction=Normal moves each triangle along the face's normal direction which results in a parallel surface.

You have that Normal Direction option in Extrude, Extract and Offset uses this direction automatically.
The difference of Extrude and Extract is that Extrude deletes the source surface (exception: If you extrude a open boundary island totally) AND connects the not selected surface with the offset surface while Extract keeps the source and generates no connecting surface.
An offset along normals may result in self intersections of the new surface when it comes to concave regions. MM's Offset tool tries to solve these self intersections.

Basically this tool gives the option to generate an extraction along normals (Connected disabled) or a extrusion along normals (Connected enabled).
Gunter Weber
Triangle Artisan