That definition is from Microsoft.
While it might seem a little confusing, what it is really showing you is you need to do a little more research. If you are reading this definition and don't know what an Azure Function is, or what stateful functions are, then stop and look them up.
Stateful is a term used in many places, firewalls for example. It means to have state, or knowledge of the past, or have context and history. Think of a banking app. Every time you launch it, it is aware of transactions that happened the last time you launched it. Stateful firewall rules are aware of the entire conversation, not just the current packet being examined. A stateful function then, has state. Maybe it's a function that counts something. When you run the function, it remembers what the previous count was, and can add to it. A stateless function cannot do this. It has no history, or state.
Serverless computing is when you use a slice of compute power (CPU and RAM). You only pay for the time you use the compute resource. Much cheaper than spinning up a server and paying for it even when you don't need it.
Durable Functions are a subset of Azure Functions, a way of creating stateful functions in a serverless compute environment. If the server you run the function on goes away as soon as you are done running the function, normally you would lose all state. Durable Functions allows you to create and run stateful functions in a serverless environment. To do this, you use orchestrator functions and entity functions.
My guess would be as long as you know "Durable Functions is an extension of Azure Functions that lets you write stateful functions in a serverless compute environment." you will be ok. (and understand what stateful and serverless mean)
I'm not sure what practice test you are referring to, or how the question is worded. I don't believe they expect you to be able to create Durable Functions. Rather you need to understand what they are, that Azure supports them, and what tools are used to create them.
Remember, practice tests are usually a little harder than the actual exam. This is to encourage you to study and do some research. This will help prepare you for the actual exam.
Don't get frustrated, keep plugging away, and asking questions. You can do it!!