With this measurement, the driveshaft shop can create the complete shaft with the required slip-yoke and predetermined play for the slip-yoke. For most applications, 1 inch is more than enough for suspension travel. Do not let a shop talk you into leaving more play than that. Some transmission shops will insist on running 1.5 inches, which would be disastrous. With that much of the slip-yoke hanging out of the tranny, there could be less than 3 inches of splined yoke in the tranny, thus creating a wobble in the yoke, which would cause a heavy vibration at various rpm. Stick with the 1-inch rule and you will be good to go.
Speed
What causes driveshaft failure is reaching critical speed. This complex formula is used to calculate the critical speed for every driveshaft. All driveshafts have a critical speed; it depends on the length and diameter. The module of elasticity of the shaft material is an important part of the equation. Getting these numbers can be a little tricky, as most shops keep the specific numbers close to the vest. For steel, the basic MOE is 30, aluminum is 10, and carbon fiber depends on the manufacturing processes used, so no numbers are available.