So, what is a Joomla Extension?

A Joomla Extension allows your Joomla website installation to extend it's abilities beyond what starts with after installation.  Adding an extension adds some function that joomla does not already have as a default installation.  An extension is not needed for Joomla to be installed or operate.  When you come across a feature you need that is not already part of Joomla, then that is when you add an Extension.  Adding an Extension may add a single ability (function/features) or add a bundled group of functions.