So, it says it right here, you can take the smaller of the gains and losses exclusively on the section 1256 trades for that year
(which in essence means the same as saying to take that 1256 carryback loss against 1256 net gain) or the gain if any reported on line 16 of schedule d for that carryback year. Bear in mind that line 16 of schedule d includes not only section 1256 transactions but a host of various gains and losses from capital gains, distributions, 4797 gains, net long term ,short term gain or loss from partnerships, s corps etc. See HERE.
I hope this helps.
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