An extension is a Business Central Application built to handle some specific functionality or change in function or process, without changing the Base or Core Code of Business Central.  This is different to a Customisation, that is written to change the Core Code of Business Central to achieve a specific result.

An Incompatible Extension Warning is generated once Microsoft have started to test the next version of Business Central. ALL Business Central environments are checked every 2-4 weeks before an update is released to make sure that all extensions or mods remain active and compatible. The error that is generated gives the Publisher all of the information required, and what changes need to be made to ensure the application/extension/customisation can be fixed, ready to test before the new update.