Are "Extensions" something that disappeared many Mac OS versions ago? On a sheet of Mac keyboard shortcuts for booting, one of them says, "hold down shift while booting and the computer will not load login items or extensions".

Am I wrong, or are Mac OS "extensions" something that were phased out a long time ago?  (In other words, with OS X Lion, the shift key simply cancels loading the login items, period?)

Note that, of course, I know that "extensions" has meaning in other apps -- Firefox, Safari, Thunderbird, etc.  But please confirm my Mac OS X suspicion as I describe it above.  

(Yep, I know this is related to my other question.  Getting this answer clear will allow me to resolve both questions clearly and designate their correct answers.)
Your expectation that extensions are only a thing of the past is incorrect.

Modern Mac OS X uses kernel extensions, which are not identical to the "old school" extensions used in Mac OS 9 and earlier, but yes, there are still such a thing as extensions. You can find them in /System/Library/Extensions.

Apple expands on this in this support document about Safe Mode.