The allowed position variation is 0.5 at MMC for the internal feature. Just like in the case of a simple hole, it means that the virtual condition boundary is 0.5 smaller than the smallest feature per the size limiting tolerance. If it was a hole it would mean a radial distance of 0.5/2=0.25 from the surface of an imaginary MMC hole located at true position to the virtual condition boundary. In the case of this example, the specification means that the width and the height of the boundary are each smaller than the MMC feature by 0.5 total, which means a distance of 0.25 from each side.