The most exciting upcoming feature for the users of Google Chrome browser is Web Apps. Chrome team is going to launch App Store very soon, which will serve as a central repository for extensions and applications both. As a lot of users and developers still have confusion over Extensions and Apps, Chrome team has published a detailed article exploring the differences between them.
According to Google, apps and extensions are simply different creatures. Users have been using many web-based applications for long inside their browser. Google Chrome is just formalizing the web app concept in a way that will be familiar to anyone who’s used apps on a smartphone. On the other hand, Extensions don’t have any UI component and they run as the extended elements of the browser itself. Google says, "Compared to apps, extensions cut across websites and web apps; they are usually in effect across all websites (though some are site-specific). Apps don’t combine with other apps in this way; they run standalone, like any regular website. The main difference between apps and extensions, from a technical perspective, is a special "launch" parameter in the manifest. It’s present only in apps, and it tells Google Chrome what to show when the user starts up an installed app. There are also a whole bunch of parameters specific to extension functionality."
Hosted Apps and Packaged Apps
The apps can be divided into two groups: Hosted and Packaged. A hosted app wraps an online website, so the CRX package can be as simple as a single manifest.json file pointing to the website. A packaged app contains the whole kit and kaboodle inside the CRX package—HTML, CSS, and so on, all run from the user’s hard drive.
Hence, hosted apps are very similar to the website launcher, whereas the packaged apps are basically the applications using user’s system resources.