Bookmarklets are little Javascripts, that you can insert into the URL bar manually or via click on a “bookmark”. They've been around quite a long time, and they are basically the pre-greasemonkey scripts. You can manipulate any website, just like a “real” add-on does.

Greasemonkey is a Firefox add-on, that allows you to run userscripts on websites automatically. Greasemonkey has some great API features, and a really good documentation. You can download tons of scripts on www.userscripts.org and start playing. It is more of a developer thing, and not that accessible to “normal users” So anyways, here's the ultimate Greasemonkey documentation: http://diveintogreasemonkey.org/toc/

FF add-ons are like the “royal league”. They are easy to install, they can automatically offer updates to the users AND with using the XUL interface language of Mozilla they also allow you to “manipulate” Firefox itself, which means you can add menu-items, toolbars, buttons or whatever. Everything is possible, but this makes it more complex than Greasemonkey scripts, of course.

Firefox was basically started on the ashes of the Netscape Navigator. Since the NN was way too overloaded, the developer team decided to remove everthing except the stuff you really need. Some developers were upset about this, because this meant that their loved features won't be part of the release anymore. So Mozilla had to implemented add-ons, or they would have lost some great contributers. Open-source add-ons are the real reason why Firefox is so awesome - Anybody can be a developer!

Since Firefox is a Mozilla open source project, you can basically download every add-on and start digging through it, use code-snipptes or make modifications of any add-on.

FF add-ons are *.xpi files, which contain a zipped folder structure, with install manifests and some other standard files. Why don't you get a simple add-on, unzip it and check it out?

We'll hopefully have a good Tutorial about making add-ons here soon. In the meantime you can check out the tutorial of roachfiend right here: http://roachfiend.com/archives/2004/12/08/how-to-create-firefox-extensions/