What is meant by "moderation" (al-wasat) in religion?

Moderation in religion is adhering to the Sunnah of the Prophet, peace and blessings be upon him, without exceeding it through extremism or falling short by not reaching it. The moderate individual follows what the Messenger of Allah, peace and blessings be upon him, and his rightly guided Caliphs were upon. Examples of extremism and falling short include:

Extremism in worship: Such as someone who wishes to pray all night and abandon sleep, or fast all year and abandon breaking fast, or forsake marriage. The Messenger of Allah, peace and blessings be upon him, disavowed anyone who turned away from his Sunnah. As for falling short, it is abandoning voluntary acts and contenting oneself with only the obligatory duties, or even neglecting them.

Dealing with a disobedient person (fasiq): The extremist (mufrit) abandons him and never speaks to him at all, while the one who falls short (mufarrit) walks with him and treats him like a righteous person. The moderate individual, however, dislikes his disobedience but loves him for his faith, and only shuns him if shunning leads to his rectification.

Dealing with one's wife: The extremist (ghali) lets himself be enslaved by her, while the one who falls short (muqassir) acts unjustly and arrogantly towards her. As for the moderate individual, he treats her according to what Allah and His Messenger have commanded, observing the Almighty's saying: ﴿And due to them is similar to what is expected of them, according to what is reasonable﴾ [Al-Baqarah: 228], and the Prophet's saying, peace and blessings be upon him: "A believing man should not hate a believing woman; if he dislikes one of her characteristics, he will be pleased with another."