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A file extension is used to identify to the computer and to the user what the type of file is. For example, if one sees a file such as MyProg.pas, this can be identified as a Pascal source code file. On the other hand, if the file is named XMas2014.jpg, then this is a JPEG picture. The extension is a way for the computer to know how to open the file when it is double-clicked. So, when you double-click the aforementioned JPEG picture, it will open in whatever program is set to be the default for that type of file (Windows Fax and Picture Viewer, for example).
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