Draw extra cards action can only be taken during the draw step after you have drawn your max hand size. so yes it is discard down to max hand size. Its just how it is written on the cheat sheet makes it a bit unclear to new players... Draw 2 extra cards then discard down, Discard down to what?
Setting change it to draw 2 discard 2 aside. adding in down to max hand size, would keep it less ambiguous.