You can extend Super Visa, or even an ordinary TRV for parents/grandparents, even without leaving Canada, as long as you meet insurance, health and funds requirements.
There is no absolute reunification against extension for longer time. Like the other answer said, it is the government's way to allow family reunification without paying health costs after the sponsorship program is restricted. My grandparent has spent the majority of time in Canada in last five years with re-entries and renewals. I know other people who stayed longer, although many of them won the sponsorship lottery later.
What you propose, however, may not work.
A medical examination may be required and a renewed insurance certificate may be demanded; without them, entry may be refused or limited. There are cases where subsequent entries are only granted for 1 year or 6 months or for the remaining period of previous entry; but that usually does not prevent you from applying to extend your stay.
Trying to game the system is also not a good look when there is a straightforward renewal path available. After all, it is at the discretion of the immigration officer.
Does the "extension of 1 year" mean that after the 2 years stay, one extra year extension (so total 3 years stay) can be requested?
The maximum period of extension that can be granted at once is one year. An extension of one-year can be requested, after which another one-year extension can be requested again.
Or does it mean that the 2 year stay is allowed only for the first initial stay, and any subsequent re-entry will be allowed for a maximum of 1 year?
There is no clear rule on subsequent entries, only the maximum on the initial entry is two years. For further entries, a two-year entry period can still be granted but it happens (very) often that only a 6-month or one-year period is granted.
These Ministerial Instructions were issued in accordance with the ministerial authority found in subsection 15(4) of the Immigration and Refugee Protection Act (IRPA), and they direct officers to consider issuing to eligible parents and grandparents a multiple-entry TRV for up to 10 years, with the status period lasting for up to 2 years on each entry to Canada.