The way I see it, there are two type of extensions for Magento (or even any other eCommerce solution):
- Community Free/Commercial extensions
- Custom extensions
Community Free/Commercial extensions would be all those extensions that you can either freely download/install trough various websites or official Magento connect or purchase from the developer if they are commercial.
Custom extensions are those which result from custom development work by some freelance developer or development team, specific to project. Usually they tend to be non-general, in terms of not usable on wider range of other Magento projects as they fulfil specific client shop need. Read more









