What is the angle $\epsilon_{cl}$ in this diagram?
This is the downwash angle. Consider it an angle by which the wing deflects the airflow behind it.
Traditionally, this angle is designated $\epsilon$. Why the $cl$ index I don't know; perhaps it reinforces its direct dependency on the wing lift coefficient, as you can see from the formula; or that this is the 'pure' downwash only dependent on the wing. In fact, every document should have a Nomenclature section which explains the designations.
Apart from $C_L$ and $A$, the effective downwash angle will depend on the distance from the wing and spanwise location. Typically, the point of interest is the tailplane: downwash reduces its effective angle of attack. The coefficient $1.62$ probably accounts for the tail location ($z_h$ etc.), but you need to double check how this $\epsilon$ is used. (You will find different coefficients in the literature).
Obviously, this will affect trimming. But downwash also has a significant effect on stability, because it changes dynamically with lift. As the angle of attack / lift (of the wing) increases, downwash also increases. Therefore, the horizontal tail experiences a reduced variation of angles of attack compared to the wing. This is further complicated by the fact that this reduction is delayed by the time it takes for the airflow to reach the tail. Generally, these are positive effects, but they must be accounted for in stability analysis.