Extending Means create a layout file and just add your changes, Overriding need whole code to be present in the layout
Extending a layout:
Rather than copy extensive page layout or page configuration code and then modify what you want to change, in the Magento system, you only need to create an extending layout file that contains the changes you want.
Override a layout
Not all layout customizations can be performed by extending existing layouts. If the amount of customizations is large, you can use the overriding function for the needed layout file.
You can find a detailed tutorial at Magento Official site at below link
Extend Layout Source
Override Layout Source