Limited Territorial Validity Visa - Schengen Visa
Normally a Schengen visa is valid for travel to all Schengen countries. However, in some special cases, Schengen visa may be issued with limited territorial validity. Such persons are authorized to transit or travel only to authorized countries and leave only from authorized countries.

Such visa may be issued based on humanitarian grounds, national interest, international obligations where it is necessary to issue Schengen visa to person who don't comply to meet the requirements to get the regular Schengen visa.

It may be issued if the travel document held by the traveler is valid only for one or a number of Schengen countries. In such cases, Schengen visa issued will be valid only for travel to those countries.

For citizens of some countries, embassy/consulate needs to consult the central authorities before issuing the visa. However because of urgency of humanitarian grounds, national interest, international obligations; such consultation is not done or such consultation has been objected.

In case of visa extensions.

Examples:
If the visa sticker says,
ETATS SCHENGEN: All Schengen countries
GERMANY: Only Germany
F-I: France and Italy only
ETATS SCHENGEN (-F, I): All Schengen countries except France and Italy