I extracted some text from the VSCode extension development guide. Hope you can get an overview first.
The extension host:
Extension host is a Node.js process in VS Code responsible for loading and running extensions. Although you don't need to worry about the Extension Host when you are writing extensions, it is still useful to know what the Extension Host does to your extension.
Every Visual Studio Code extension needs a manifest file package.json at the root of the extension directory structure.
Contribution Points are a set of JSON declarations that you make in the contributes field of the package.json Extension Manifest. Your extension registers Contribution Points to extend various functionalities within Visual Studio Code. Here is a list of all available Contribution Points:
"Workbench" refers to the overall Visual Studio Code UI that encompasses the following UI components:
VS Code provides various APIs that allow you to add your own components to the Workbench.