Hot water extraction is what most people know as “steam cleaning”
In essence, it is breaking the dirt down, then rinsing it out. It’s a bit like washing your hair.
You use a product to dissolve the dirt then you rinse the solution (and dirt) out with clean water. Just like shampooing your hair, if you miss a stage out you’ve got problems.
Generally speaking, the more powerful the machine, the cleaner and dryer it leaves the carpet (assuming the operator knows what they are doing).