This mishnah deals with the form of tumah known as tumas midras: when a zav, a zavah or a niddah sits on an object designated for sitting, even though they do not touch it at all, the very fact that it is beneath them renders it tamei midras. Such an object becomes a full av hatumah, exactly like the zav, the zavah and the niddah themselves, and anything that touches it becomes a rishon letumah.
The levels of guarding against tumah:
The mishnah discusses the fact that there are different levels of guarding against tumah, corresponding to the level of purity in question. Just as in the previous mishnah we saw the levels of chullin, maaser sheni and Terumah, so too these levels apply to a person's guarding of his vessels and garments: one who guards at the level of Terumah, his guarding is not considered guarding at all in relation to one who guards at the level of kodashim.
The concern at every level is that, from the perspective of the higher level, the one guarding at the lower level is not sufficiently careful. Although at his own level he does guard against tumah, his care is not the care demanded at the level above him, and therefore at every level we suspect "perhaps his wife, who is a niddah, sat on it" and the vessel became tamei midras.
The ladder of levels in the mishnah:
"Bigdei am ha'aretz midras laperushin" - an am ha'aretz is not particular about the laws of tumah and taharah in the way that the perushin, the Torah scholars, are particular. Therefore all his garments and vessels are regarded by the perushin as tamei midras, and they must assume that his wife, who is a niddah, sat on them.
"Bigdei perushin midras le'ochlei terumah" - the perushin eat even their chullin in purity, and nevertheless their garments are considered midras for those who eat Terumah. The Gemara clarifies that a level is in fact missing here: the garments of the perushin who eat chullin in purity are midras for those who eat maaser sheni, and the garments of those who eat maaser sheni are the midras for those who eat Terumah.
"Bigdei ochlei terumah midras lakodesh" - the vessels and garments of those who eat Terumah are considered complete midras with regard to those who eat kodashim and korbanos.
"Bigdei kodesh midras lachatas" - the garments and vessels of those who eat kodashim are considered midras with regard to those who guard their purity at the level of the parah chatas, the parah adumah.
The two accounts at the end of the mishnah:
"Yosef ben Yoezer hayah chasid shebakehunah, vehaysah mitpachto midras lakodesh" - Yosef ben Yoezer was the holiest and most righteous of the kohanim, and he was careful to eat even his chullin in the manner in which Terumah is eaten. Nevertheless, the cloth he used at his meals was considered midras in relation to the level of kodashim, since his care extended only to the level of Terumah and not to the level of kodashim. It emerges that even the vessels of a man of his stature were considered midras with regard to kodashim.
"Yochanan ben Gudgeda hayah ochel al taharas hakodesh kol yamav, vehaysah mitpachto midras lachatas" - Yochanan ben Gudgeda was careful all his days to eat his chullin at the level of kodesh, which is higher than the level of Terumah. Nevertheless, in relation to the level of the parah adumah his cloth was considered midras for the chatas, which is the level above kodashim.
In summary: in this mishnah we learned the essence of tumas midras, and we saw the ladder of levels of guarding, from the am ha'aretz up to the purity of the chatas, at each of which we suspect "perhaps his wife, who is a niddah, sat on it," because guarding at the lower level is not considered guarding for the level above it. The two accounts that conclude the mishnah, concerning Yosef ben Yoezer and Yochanan ben Gudgeda, teach that even the greatest of those who are careful are considered unguarded in relation to the level above the one they were careful about.