MagentoModules

Modules are the core of Magento. Every action on the site, frontend or backend,goes through a module. Modules act as containers for one or more of the following:

1.settings,

2.database schemas,

3.rendering objects,

4.utility helpers,

5.data models,

6.oraction controllers.

A module can be made of all six of these things, or just one.Modules are defined as being on or off in an XML configuration system located in app/etc/modules/. Each module can specify its own settings in an XML file as well, located under themodule’s etc/ directory.
Since everything in Magento is a module, and modules have self-contained configuration and database settings, this allows you, as a developer, to extend Magento exactly as the core system is built.