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SharePoint Framework Extensions let developers extend the user experience of SharePoint, providing ways to customize more facets of the SharePoint experience including notification areas, the toolbars of SharePoint, and the views of list data.

SharePoint Framework Extensions add new capabilities to extend the user experience of SharePoint within modern pages and document libraries, while leveraging the familiar tools and libraries for client-side development coming from the SharePoint Framework. Specifically, the SharePoint Framework includes three new Extension types:

ApplicationCustomizers allow developers to add script to the page, as well as access well-known HTML element placeholders and extend them with custom renderings

FieldCustomizers can be used to provide modified views to data for fields within a list

CommandSets let developers extend the command surfaces of SharePoint to add new actions, along with client-side code that can be used to implement behaviors.

Reference - SPFx extensions overview