Rather than paraphrasing this passage, I'll attempt to summarize it by breaking it down and explaining my interpretation of it piece by piece.
The author begins by stating that the approach or intention of the science fiction genre is a "supposedly factual" one. This, to me, is simply to state that SF works through verisimilitude in the same way ordinary fiction does. We, as readers, know that it's not factual, but it's presented to us as if it were factual. The author then compares Columbus's "letter on the Eden he glimpsed beyond the Orinoco mouth" with Swift's Gulliver's Travels, saying that although the first is intended as "nonfictional" and the second as "nonfactual," and although they represent two extremes of the mixing of the real and the imagined, they are basically not very far apart. This is rather like saying that fiction and non-fiction, though different genres, are really just two forms of the same thing. The reader can be confronted with factual things that seem fantastic on the one hand and fictional things that appear similarly on the other. SF creates its own complete world, a "factual reporting of fictions," using a new standard of what is normal. The author describes this new set of norms as "a Ptolemaic-type closed world picture."
Why is the Ptolemaic system invoked in order to explain this "new set of norms" that science fiction creates? Probably because that theory, in which the sun and planets revolve around the earth, is unreal, but "works" if one wishes to see the system that way, as people did before Copernicus. Science fiction creators create scenarios with their own frames of reference, not conforming to "reality" as we know it but valid according to a separate set of terms.
So far, the author's statements, though expressed in a more complicated manner than many of us might think necessary, are reasonably clear. He (or she) then, however, equates this technique of SF with the literary attitude of estrangement. This refers to the making of a subject we recognize seem unfamiliar. The writer who used this term to describe his own technique was Bertolt Brecht. (In German, it is Verfremdungseffekt, which has more often been translated as "alienation effect," though "estrangement" is synonymous with it.) Brecht asserted that Galileo came to his scientific understanding of certain phenomena by deliberately seeing them in this light—as familiar things which have been defamiliarized, made to seem alien. This process Brecht then applied to art. In his plays, the audience is supposed to become detached in some sense from the characters and situations on stage, and this becomes a means by which those elements of the drama are better understood than they otherwise would be. In the final statement of the quoted passage, the author says that estrangement, the attitude which Brecht used in a "realistic" context, has become the framework of the entire science-fiction genre.
I have to admit that in my view, this seemed initially an unexpected way of looking at science fiction. One might think that the opposite actually happens when we read SF—that "the strange," occurring in the alien planets and the beings who populate them, is made to seem familiar to us, and not the other way around. But it's simply a matter of perspective. In a science-fiction narrative, the elements of human experience, with which we're all familiar, are cloaked in, or transposed to, a setting that is alien and unfamiliar. In this way, we are distanced from those elements and made to see them in an objective way that would presumably not be possible if they were given a normal terrestrial setting.