I was wondering what this edge actually does. It says that the ranger suffers a smaller penalty to the ambush for a crippling ambush. But that doesnt say how it does that.

Specificly, it doesnt say if it reduces the damage penalty on the cripple ambush or the accuacy penalty for adding multiple other options with it.

Could one of the imms give me an idea if it is one, the other, or both?

Both. (And, actually, the accuracy of landing cripple period.)

The more ambushes you stack, the less likely you are to land them. The damage itself doesn't keep going down. For example, throwing in an onslaught moves the damage back up, but further reduces the likelihood of landing it.