If you have a 2.5D machining example with Horizontal Arc Lead In moves then it is difficult to apply cutter compensation, as this can only operate on linear moves (and not circular ones). Extensions let you add a Straight lead, prior to the Lead In, over which distance the cutter compensation can take effect.
Using the pockets.tri example with a Constant Z toolpath with a 10 mm end mill tool.
In detail:
Extension
Lead in
Lead out