Power Dissipation of Power Mosfet
I understand that they are at different case &amp; junction temperature
  but what do they actually mean &amp; how to use this data?


Using the example of case temperature being controlled/limited to 25 degC, the spec says you can dissipate 71 watts. Now look at maximum junction to case thermal resistance - it says 2.1 degC/watt.

So, for 71 watts I would expect the junction to rise to 149 degC above the case. This ties nicely with the case being fixed at 25 degC because 25 + 149 = 174 degC - ok a slight discrepency with the stated max junction temperature.

8 watts would raise the junction by nearly 17 degC above the case. However using the "Maximum Junction-to-Ambient Steady-State" value, 8 watts will raise the junction up to 8x50 degC because now, the case isn't "held" at some value. This is why you need a heatsink.

If you went for a heatsink that was rated at 3 degC per watt (case physical connection to ambient), you use that figue (3 degC/watt) plus junction to case (2.1 degC/watt) to get a combined number of 5.1 degC/watt. Thus, for a junction temperature of not more that 175 degC in a controlled ambient of 25 degC, the temperature rise of 150 degC divided by 5.1 degC gives you the max continuous power i.e. 29.4 watts.

A heatsink of 16.65 degC/watt would be on the cusp of tolerating an 8 watt internal dissipation because 16.65 (external) + 2.1 (junction-to-case) = 18.75 and 150/8 = 18.75.

Does this help? Maybe these simplified pictures will: -