I’ve always been under the impression that when a buyer sends notice for additional inspections then the initial timeframe is void and buyer only has the additional timeframe to reply. For example, Buyer has 7 days for initial inspection. On day 1 they conduct inspection and give notice for "additional inspections" for roof issues. Additional period is 2 days. Does buyer lose all remaining days of the initial period and now only has 2 days to reply or is that additional 2 days tacked onto the end of the initial 7-day period?

Broker’s understanding of the operation of the form is correct. Once a buyer delivers notice of additional inspections, the buyer’s original inspection time period ends and the additional inspections time period begins. Once the additional inspections time period ends, the buyer’s inspection contingency ends. Using the days given in the question, buyer’s original 7-day inspection contingency was cut short by the delivery of the "Additional Inspections" notice. With delivery of that notice, buyer reduced buyer’s remaining inspection contingency period to only two days.