Please ignore this post. I obviously needed to get some sleep before I posted it.

OK. I know that you already understand it, but just to be clear, the \1 in the replacement string expands to the text that was matched between the 1st \( and the matching \) in the substitute regular expression. And, the -.*- between the parens in that RE will match the 1st - on the line (- in the RE), everything after the 1st - unto but not including the last - on the line (.* in the RE), and the last - on the line (- in the RE).
The RE between parentheses in this sed substitute command (-[^-]*-) matches the 1st - on the line (- in the RE), the longest string of characters available that does not include a - ([^-]* in the RE), and the 2nd - on the line (- in the RE).

So, these sed commands do the same thing for input lines that contain two or fewer - characters. But, for lines that have three or more - characters, the 1st sed prints the 1st and last - and everything between them while the 2nd sed command prints the 1st and 2nd - and everything between them. And, to stop printing the matched - characters, move them outside the parentheses in the RE:

Code:

sed 's/.*-\(.*\)-.*/\1/'
sed 's/.*-\([^-]*\)-.*/\1/'

Please ignore this post. I obviously needed to get some sleep before I posted it.