A Component is the largest and most complex of the Extension types. Components are like mini-applications that render the main body of the page. An analogy that might make the relationship easier to understand would be that Joomla! is a book and all the Components are chapters in the book. The core Article Component (com_content), for example, is the mini-application that handles all core Article rendering just as the core registration Component (com_user) is the mini-application that handles User registration.
Many of Joomla!’s core features are provided by the use of default Components such as:
A Component will manage data, set displays, provide functions, and in general can perform any operation that does not fall under the general functions of the core code.
Components work hand in hand with Modules and Plugins to provide a rich variety of content display and functionality aside from the standard Article and content display. They make it possible to completely transform Joomla! and greatly expand its capabilities.