As the name suggests, this is, in the simplest case, the location where the static content of your web site lives -- HTML files, images, or sounds -- content that doesn't change on a request-by-request basis.Extensions (DLLs) are used on Windows systems to add functionality to PHP.
The official distribution does not provide every possible extension, just some popular (and tested) ones that the developers feel are suitable for prime time.
The following function sets, however, are pre-compiled into the official distribution of PHP4, and therefore do NOT require additional extensions:

Regular expression support
Dynamic library support
Internal Sendmail support
Perl-compatible regular expression support
Session support