Extension Downgrading is exactly what it sounds like. It allows players to downgrade the level of their mechs' extensions in order to receive a full EP and NIC refund. The feature is largely intended for new players who aren't sure how to build their bots, so it will only be available to players for 30 days after the creation of their first character. However, since it's a new system, current players will be able to use the feature for 30 days after the feature goes live.
For the full details on the patch, boost yourself over to the official Perpetuum site.