The tangential electric field is just the electric field projected onto the surface. So the requirement of continuity means that the projections of $\mathbf{E_{1}}$ and $\mathbf{E_{2}}$ onto the surface must be equal, which is what the equation describes.
If the surface in question is the $xy$-plane, and $\mathbf{\hat n}$ is oriented in the $z$-direction, then the cross product is nonzero if $\mathbf{E}_{1} - \mathbf{E}_{2}$ has either $x$ or $y$ components. The condition that the cross product be zero requires that $E_{1, x} = E_{2, x}$ and $E_{1, y} = E_{2, y}$. If only their $z$ component differs, then $\mathbf{E}_{1} - \mathbf{E}_{2} = (E_{1, z} - E_{2, z})\mathbf{\hat z}$. The cross product of two vectors with the same orientation is zero, so $\mathbf{\hat n} \times (\mathbf{E}_{1} - \mathbf{E}_{2}) = 0$ and the boundary condition is satisfied.