Simple definition
A SIP extension identifies a user, endpoint, or service within a telephone system.
Purpose and use
An extension associates an internal telephony identity with a user, endpoint or service.
How does it work?
The PBX maps that identity to destinations and calling rules. The internal number, authentication identifier and SIP URI can differ.
Example and verification
When replacing a phone, verify the assigned account, calling permissions and active contacts rather than only the displayed number.
Points to watch
An extension does not imply a dedicated public line or exactly one device. The model depends on the PBX and registration policy.
In short
An extension represents a functional system identity whose access and routing should match the intended use.