I guess I do understand all the other cases of the Application trigger, but I, at best think there is an overlap between these two ("Is Active" and "Is Running") and it obviously can't be.
I can understand your confusion. The KM Wiki does not completely correspond to what is actually shown when you add an "Application Trigger":
KM Editor Screenshot
KM Wiki
The Application trigger allows you to execute a macro when an specified application (or any application) does any of the following:
Launches.
Quits.
Periodically while the application is running.
Activates.
Deactivates.
Periodically while the application is at the front.
What confuses me is that "Is Active" is NOT an event. And KM defines triggers as "events":
Keyboard Maestro has a variety of triggers. A trigger defines what event causes a macro to be executed, provided that the conditions set by the Macro Group it is in are met.