We can look through this documentation to get a general idea of what we are able to modify on a CraftBukkit server. Server-side plugins are different from client-side mods. We are limited with what we are able to modify in the game using server-side plugins. For example, we cannot create a new type of block but we can make lava blocks rain from the sky. We cannot make zombies look and sound like dinosaurs but we can put a zombie on a leash, change its name to Fido and have it not burn in the daylight. For the most part you cannot change the visual aspect of the game, but you can change how it functions. This ensures that everyone who connects to the server with a standard Minecraft client will have the same experience.
For some more examples on what we can do, we will view various pages of the API docs. You will notice that the classes are organized into several packages. These packages help group similar classes together. For example, a Cow, a Player...