Hi Mav,
What this is getting at is the distance off the target's track. So basically, for the given AOB, you will be (current range x corresponding fraction) from the target when he steams past you at a 90 deg AOB, assuming you are either stopped or moving parallel to the target's course. This is of course handy in planning the attack such that you don't accidentally get run down and find yourself with a torpedo run less than 300 m arming distance.
Hope this helps, please let me know if not clear.
Also check out my tutorial in my sig - a bit involved but worth it!