What is an extension in the context of Microsoft Dynamics 365?

An extension in the context of Microsoft Dynamics 365 refers to a way to customize and enhance existing functionality without modifying the base application. This approach allows developers to add new features, improve processes, or modify workflows while ensuring that the underlying system remains intact and upgradable. By using extensions, businesses can tailor Dynamics 365 to their specific needs without the risks associated with altering the core code of the application, which can lead to complications during updates or upgrades. This design principle supports a more modular and maintainable approach to custom development within the ecosystem of Microsoft Dynamics 365.

The other options, while related to aspects of working with Dynamics 365, do not capture the specific role and purpose of extensions. They either focus on different functionalities or tools that serve separate purposes within the broader framework of the software.