The linked PDF has a detailed explanation of their definitions in the appendix at the back: http://nlihc.org/sites/default/files/oor/OOR2014.pdf

The number for “fair market rent” in each market is provided by the US Dept of Housing and Urban Development, and:

Out of Reach is consistent with federal housing policy in the assumption that no more than 30% of a household’s gross income should be consumed by gross housing costs. Spending more than 30% of income on housing is considered “unaffordable.”