From context-free to context-sensitive
Saying that CF grammars are properly contained in CS grammars is not quite
correct, at least according to some authors (Hopcroft-Ullman
1979, page 223). Their reason is that the CS languages cannot contain the empty
word $\epsilon$, at least according to a strict definition of what a
CS grammar is: the right-hand side must be at least as long as the
left-hand side. Other definitions of CS grammars, such as given in
wikipedia, do allow the rule $S\to\epsilon$, provided $S$ never
appears in a right-hand side. The purpose is to allow CS languages to
contain the empty word, so that they define the same family of
languages as the linear bounded automata (LBA). And it also makes CF languages a subset of CS languages.

Context-free (CF) languages can contain the empty word.

Thus, for an author belonging to the strict school (no $\epsilon$ in
CS languages), only $\epsilon$-free CF languages are contained in the
CS languages.

From what I read in your question, my understanding is that the
authors of your book belong to the strict school. So they will not
consider a CF language as CS, unless they first remove the empty word,
which does not change their CF character as shown in the answer by
D.W. that indicates how to obtain the CF grammar $G'$ from the CF
grammar $G$.

Apparently the author is analyzing the intersection of two CF grammar,
and wants to use the fact that (for him) $\epsilon$-free CF languages
are contained in the CS languages. So he considers separately the case
when the intersection contains $\epsilon$, and the case when it does
not contains it. If it does no contain it, he can remove it from the
two languages, and then consider them CS languages, for whatever he is
doing.

That is my explanation of what you are reading. Of course, a larger piece of context would help ascertain that view. Or even better, the definition of CS language they give.