What exactly does "If You […] litigation is filed" from Apache2 license mean?

With respect to apsillers, I don't agree with his/her answer as it originally appeared. There are licences where the licence itself terminates on infringement, such as GPLv3 (see s8), but the Apache licence doesn't appear to be one such.

Apache2 s3, which is what you quote above, refers to the grant of patents that accompanies the licence, and deals with the termination of that. Specifically, when someone makes software S available under Apache2 they are covenanting a licence to any of their patents that S might infringe upon, though this licence only covers the context of the software. In other words, A agrees not to give you software S under Apache2 that embodies their patent P, then turn around and sue you for infringing P when you use S.

The clause you quote says that if you decide that S infringes your patent P2 and you decide to sue A for distributing software that embodies P2, your licence to use P (not S) terminates ("then any patent licenses granted to You ... shall terminate").

This will also mean that you can no longer lawfully use S, which looks like a termination of the whole licence. But it's subtly different: if you were to modify S so that it no longer embodies P, you still have the right to use that modified version (say, S2). You may also distribute that version, though if you were to do so under Apache2 you would be convenanting not to sue people who used S2 for violating P2 (assuming S2 embodied P2). If the original licence had terminated in its entirety, you would no longer have the right either to modify S or to distribute S2.