The command line is the a way of interacting with the operating system using text commands. Basically a GUI (what you usually interact with graphically) is overlaid on top of that. The problem with using a GUI sometimes is the lack of feedback information (for example, say an application crashes, with a GUI you may not know what caused it, but if it's in the terminal you will get a detailed error message).

It's not necessary to use the command line in day to day basic operations. Although if you do alot of software testing or install software still in development (from extras-devel) then you should likely learn it just as a backup (and to give feedback to the developers. For example, posting a detailed terminal output versus saying the application crashed).

Extras-devel, extras-testing, and extras are basically the source of the majority of community apps. They are placed in what's called a repository in the Linux world (basically a server that hosts all the files). Extras is the one most people will install apps from, and is the most stable. Extras-testing is applications that developers have promoted from extras-devel, basically applications are ready to be tested in a testing stage (to move them towards extra).

Extras-devel is the developmental state. Applications may not be finished, buggy, may not even work, may break some of your N900's functions until you uninstall the software, reflash, etc..