This is the "work for hire" part of copyright law. The exact details depend on your jurisdiction, but in common law countries especially, copyright in works created for a job rests with the employer and not the author. For instance in the UK
Where a literary, dramatic, musical or artistic work, or a film, is
made by an employee in the course of his employment, his employer is
the first owner of any copyright in the work subject to any agreement
to the contrary
(Under UK law, computer programs are subsumed under "literary works"). In the US, a work for hire is "a work prepared by an employee within the scope of his or her employment". Even in France and Switzerland (which generally do not have the work-for-hire concept), software created by an employee vests in the employer.
This does not mean that if you have a job (any job whatsoever) that your employer holds copyright to anything that you create: the product must be reasonably related to the employment. As a paraphrase, if you are hired to write software, that would mean that the employer hold copyright to software rights that are created "at any time during the course of employment which relate to, or are reasonably capable of being used in, the business of the company".
An employer can of course waive their rights as part of an employment contract, so that would certainly be open to negotiation. That clause in the contract essentially informs you what the law is. Let's then assume that you are hired to write tax-accounting software. But you have a hobby of writing some other kind of accounting software. Even if you do the work away from the office, outside of office hours, this work is during the course of the employment and reasonably (indeed, obviously) related to what the business does. If you are hired to create game software, accounting software is still reasonably (eminently) capable of being used in the business of the company. Finally, suppose you are hired by Omni Consumer Products which creates control software, and your hobby is creating amusing fractal display software. Not reasonably related: but Omni is a subsidiary of Umbrella Corp. and an associated company sells amusing games in need of fractal display software. In these cases, the hobby software could well be subsumed under "work for hire".
Copyright statutes usually leave the notion "course of employment" undefined, so it's up the judge and jury (or previous judges and juries) to decide whether a particular set of facts describes a work for hire, or not. The above clause basically says "if you create something that we could claim as a 'work for hire', you have to tell us". In terms of asking for clarification, I don't see that there is anything that they could (would) clarify. One can always attempt to negotiate specific exclusions, thus a contract could narrowly delimit particular hobbies that are excluded from the scope of employment.
