From Mozilla Firefox
Add-ons are small pieces of software which change or add to the appearance or
functionality of Firefox. There are two kinds of add-ons: extensions
and themes.
Extensions
Extensions add new functionality to Firefox. They can add
anything from a toolbar button to a completely new feature. They allow the
application to be customized to fit the personal needs of each user while
minimizing the size and appearance of the application itself.
Themes
Themes modify Firefox's appearance. They allow you to change the
look and feel of Firefox and personalize it to your tastes. A
theme can simply change button images, or it can change every piece of
Firefox appearance.