What is an extension?

An IBM Director extension can be many things. At it's simplest, an IBM Director extension is a set of code that you write to add some new functionality to IBM Director. Some examples of the functionality that an extension can provide are:

More details about what kind of functions can you add with the SDK?

The areas of IBM Director that you can extend are described in the Programmer's Guide overview. You can pick and choose the areas of IBM Director to extend to make your new function available to Director Users. If you have not already read the Programmer's Guide overview, you should do that now.

What areas of IBM Director should you extend?

This will depend on what management problem you are trying to solve with your extensions. See Extension patterns and the SDK samples for possible extension ideas.