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Both extend the features and functionality of Magento, but could anyone point me out what are the differences between them? As I wasn't able to find a clear explanation.

Thank you.

+3  A: 

I've finally found the answer.

Extensions are simply packed modules. In other words, you extend the features and functionality of Magento by writing a module. Then you have a choice to leave it as it is or pack it up (System > Magento Connect > Package Extensions). An extension (a packed module) is then published on Magento Connect.

Cinnamon