1) In computer operating systems, a file name extension is an optional addition to the file name in a suffix of the form ".xxx" where "xxx" represents a limited number of alphanumeric characters depending on the operating system. (In Windows 3.1, for example, a file name extension or suffix can have no more than three characters, but in Windows 95 and later, it can have more.) The file name extension allows a file's format to be described as part of its name so that users can quickly understand the type of file it is without having to "open" or try to use it. The file name extension also helps an application program recognize whether a file is a type that it can work with.
2) In programming, an extension is a file containing programming that serves to extend the capabilities of or data available to a more basic program. Extensions are sometimes required to be stored in a separate extensions file so that they're easy to locate. When installing software, you may be instructed to take one or more steps related to installing extensions (or these steps may automatically be done for you).