It's basically an average of how many balls the lesser player would need to pocket in order for the win rate to be "roughly" 50%, over a number of games. It takes into account moving, shot execution, who lags the ball to their pocket better, etc. Also, how many balls a player runs on average.
The difference between players like Efren and Cliff may be indistinguishable from a lesser player's perspective, but the differences are there, and they are real. Efren was a slightly better ball runner, so Cliff would sometimes run 6 balls and then miss, and Efren had much better odds of running 8 and out from difficult positions, as compared to his peers. So, if Cliff had run "7" balls, instead of 6, he dramatically increases his chances of winning the game. But he left that extra ball on the table too often, leading to him "needing a ball" from Efren. Though I think Cliff ran balls just fine, and most of that ball difference was Efren's phenomenal moving.
As for where these spots come from, there are breakdowns on here in old posts of One Pocket handicaps, that go from some spot that barely proffers any advantage at all, to those where the better player will need to run 6+ balls on a regular basis, while giving the opponent very little to shoot at for multiple innings at a time.
