Question: What's the Difference Between a Chrome Web App and an Extension?
The Chrome Web browser and Chrome OS introduce a new way to think about browsing the Web. Traditional browsers have extensions and themes, but what is this new Web app idea for Chrome? What's the difference between that and an extension?
Answer: Web apps are basically websites. They run within Chrome's browser, and they may not even require any downloads. Sometimes they may need to install a small component on your local machine, but that will only make a difference when you're using that particular Web app. An example Web app would be Google Docs. It runs within the browser and doesn't require you to download anything, but it has its own user interface.
An extension, on the other hand, affects something global on your browser. For instance, an extension may add the ability to save items to your Amazon.com wish list. When you install the extension, that feature is available on every single site you visit, not just on Amazon.com. Extensions use downloaded components to modify your browser.
Why is Google making a site with apps that are basically just links to websites? Some of it is to acquaint users with this method of using a Web browser. Another reason is to facilitate payments. Not all apps are free, and Google is hoping to set up the Chrome Web App store as a method of purchasing these Web services.