Krause Rare Vs Extremely Rare

The difference is practical reality. Krause does not update their information very often, while people who deal with rare coins usually are up to date on the population of a particular one.
For example, this coin I recently posted: https://goccf.com/t/97966
The most recent Krause catalog states there are 4 known to exist. At present there are at least 10 and possibly 12 known to exist. The difference is not big, but if that many were discovered in the few years since Krause published their figures, it means there could easily be 50 of them out there, between those known and those waiting to be discovered.
Someone looking only at Krause would be inclined to pay a higher price than the actual rarity of the coin commands.
Hope that helps. =)