Navigating to options in context menus
In cases where there is not a visible shortcut, it is based on the title of next item. If you type the first few letters of the title of the menu, it will be selected. So if I wanted to select "Introduce Parameter" in your example above, I could quickly type I N T or I N T R to select it. My guess is that the case of "Extract" above, it is taking you to the next unique case alphabetically - you have three "Extract " listings and the next unique letter, alphabetically is "Extract *C*lass." If you wanted to select the previous entry, I think you'd be stuck with typing E X T T R A C T &nbsp;I&nbsp;

You can select Finder items on the Desktop, or in folders, in a similar manner. If I want to select a file called "my stuff", I can start typing M or M Y instead of single-clicking the file itself.