They are measured the same way as the old, quill stems; from the intersection of the steering column axis and extension axis, to the intersection of the extension axis and handlebar axis. In other words, along the central axis of the stem, from the centre of the fork hole, to the centre of the handlebar hole.
You do realize that you will require a new headset and fork to use with this stem, unless you get a quill adapter? Also that threadless stems are sold with different amounts of rise, and that you need one with -17 degrees of rise to have a stem extension that is parallel to the ground, like a standard, road, quill stem?