Extensions are an easy way to distribute you Wave applications. When the user has installed an extension the user can add robots or gadgets just by pressing a button. This is much easier then remembering the URL of the gadget or Robot. For robots it is pretty simple, since you can add the robot to your gadget.
What is even more exciting about extension is they can allow for an app store for Wave applications. It would be very interesting, if you could sell/buy as easy as you can from the Itunes App store. If it was possible just to make applications and then have somebody else to sell them, more developers would be interested in developing applications. That way you don’t need to finance you gadgets with ad words.
I was looking at the blog on How To Uninstall An Extension or Plugin on Google Wave. The blog does not give an explanation on how to install gadgets, so I have been working to find a way to do it. I should just have a look in the getting started wave.
I have been looking at creating my own extension and install them. In the sandbox there was a debug menu, where you can stall the extensions from. In the preview system you needed to find a place the gallery wave (Search for: Extension Gallery). From this wave it is possible to install the gadgets Google has accepted by clicking on a button.
This video shows how the gadget installer and uninstaller work.
I you are a developer and want to test your own extensions you can do it by installing the “Extension Installer”. When this is installed you can install new gadgets from the gadget URL. So this is the way you can test your application, before you send it to the app store. I don’t know you can share the applications with other or they need to install via the developer gadget.
Update: if you want to write an extension your self have a look at Extension Installer XML creator (for Gadget)