"Crop" in Gimp means cutting the image into a rectangle, so in your case, "Crop to selection" takes the smallest rectangle that contains your selection and crops the image to it.
To extract the pencil, two ways:
1) Delete the rest: Layer > Transparency > Add alpha channel (if not done already), Select > Invert (so that you select the background) and Edit > Clear to delete the background.
2) Copy to another layer: Edit > Copy, Edit > Paste, and Layer > To new layer (Ctr-C, Ctrl-V, Ctrl-Shift-N)
Note that either method won't give a truly satisfactory result (there will be a halo with the old background). But we will come to this later.
To extract the pencil, two ways:
1) Delete the rest: Layer > Transparency > Add alpha channel (if not done already), Select > Invert (so that you select the background) and Edit > Clear to delete the background.
2) Copy to another layer: Edit > Copy, Edit > Paste, and Layer > To new layer (Ctr-C, Ctrl-V, Ctrl-Shift-N)
Note that either method won't give a truly satisfactory result (there will be a halo with the old background). But we will come to this later.