PC-specific Terminology, which we can basically blame the likes of IBM and Micro$oft for.... Even worse, OSes like BSD UNIX use a more unix like notation internally (FreeBSD handbook gives great explanation).
You can have as many physical hard drive devices as your computer can support; most desktop machines can handle at least 2 of them. Older systems (cica 1980s-90s) can be even more irksome in limitations, but they are rarely an issue these days.
Each physical hard drive, has a table at the start of it's free space, which gives the computer information on it's partitioning; this is what people mean when they say "MBR" or "Master Boot Record". The MBR explains to the computer that the disk can have up to 4 primary partitions, operating systems like Windows follow the really old (pre DOS) convention of assigning drive letters to these. Because some times we want to have more partitions then 4, there is a trick that allows a trick makes "DOS Extended Partitions" work; that basically means, MBR -> look in partition X -> find another MBR like table in partition X, use that to locate logical drives within partition X.
Courtesy of MS-DOS, we can only have one primary partition made "extended", but each Primary Partition used by BSD (called a Slice in unix speak) is an extended partition in it's own way. Here is an example from my own desktop:
--> E: drive
--> F: drive
500GB SATA hard drive
--> Primary Partition 1
------> C: drive, used by Windows XP
--> Primary Partition 2
------> Slice 2, used by FreeBSD 7
---------> / partition of FreeBSD
---------> SWAP partition of FreeBSD
--> Primary Partition 3
------> used by GNU/Linux
--> Primary Partition 4
------> Extended Partition
----------> Logical Drive 1
--------------> Linux SWAP partition
----------> Logical Drive 2
--------------> P: drive, stores programs for Windows XP
----------> Logical Drive 3
--------------> S: drive, stores misc files for all OS
----------> Logical Drive 4
--------------> R: drive, stores backups of files on all OS
An extended partition is merely a primary partition that holds more partitions; called logical drives in DOS speak.PC-BSD requires a primary partition, because it's a bit more tricky to boot BSD out of a logical drive.
If you told PC-BSD to install into a Logical Drive or Extended Partition, it would treat them as one big partition (because they really are); example, if I installed PC-BSD into my Primary Partition 4; all those logical drives go with it. That is just the way things work, the BSD partitioner doesn't support install into logical drives, and PCs only allows one extended drive. If you want a more detailed (but easy to follow) explanation, including the things I left out, feel free to check wikipedia
Originally people were free (and have) screwed up their hard drives with trying to install into a logical drive. If you've been trying to install PC-BSD into a logical drive all this time, it looks like it finally stops people from shooting themselves in the foot.
Good thing, in that it protects data for people who can't read the warning message on the left side of the installer; bad thing, in that it limits the overall flexibility of the installer, which is already very limited compared to FreeBSDs old sysinstall.