To ensure a transition plan, which includes a salary for X years and a cushy job as advisor/ambassador, or, if he wants, to continue coaching elsewhere without any prohibition. Hell, maybe they also agree to a buyout payment for Stevie in that event, to sweeten the deal, define ambassador duties, what hat he'll wear at Cooperstown** (I know), roles, say in future events, non-disparagement should he leave, book rights to intellectual property, use of Patriots logos, Patriots rights to use his name, image likeness after he departs, restrictions on sale of partnership interests, if he has received any as comp., lifetime healthcare and dental after retirement, etc.
In other words, "an extension" means nothing without details about outs and options.