The EMOF-based models should be 100% OMG compliant, so you should select this option when you need to interchange models with other OMG tools.
[The EMOF functionality is currently restricted by limitations in the MDT OCL configuration.]
The EMF-based models are those used internally. Using these models avoids some slightly troublesome EMF to EMOF translations.
Note that these definitions are independent of the editor file associations defined in the General->Editors->File Associations preferences page.
All text extensions define the extensions for which builders will perform a text (concrete syntax) to XML (abstract syntax) conversion.
The first text extension defines the extension appended by a reverse transformation to text (concrete syntax) from XML (abstract syntax) conversion.
The first XML extension defines the extension appended by a forward transformation from text (concrete syntax) to XML (abstract syntax) conversion.
Note that builders remove the text extension before applying the XML extension, whereas editors just append the target extension. This avoids an edit of an XML file corrupting a text file.