The classes marked as "abstract" are the parent/ancestors. You cannot make an object out of them, they serve only as "blueprint"/model.

The children use "extends" keyword to show they use the base classe, inherit from it. They can use everything defined in the base class (unless it is private) and override the methods (ie. redefine them, with capability to still call the original one).

It is powerful because it allows to define a base mechanism (all shapes have common state and behavior) and yet to specialize them (you can override isOver() for Circle to take in account radius instead of bounding box).

Note also the abstract method showShape() in Shape class: it makes no sense to define this method for something abstract, but it forces children to define this method, otherwise the code won't compile. It is also a kind of contract: you know a Shape will have such method.
Although for such contract, we usually use an interface, but that's another story.