"Embrace" is indeed not in this example, but would depend on whether the project originally adhered to some community standard.
The "extend" part might map to maintaining or getting free labor for a project, maybe to eventually modify it in an incompatible way once sufficient usage share is attracted, if you can get other devs to do it.
"Extinguish" would then be breaking the public version completely while possibly still using the working code in proprietary software.
The "extinguish" part needs a CLA to be legal, or with, say, the GPL, they'd be required to publish the source of the derivative work.
