There are three very important facets of extensions that many people don't understand properly. These facets are the license under which an extension is released, if an extension is encrypted, and if so, how much is encrypted, and also the commercial nature of a product. Understanding these properly can save us a lot of headaches.
There are two main groupings of licenses which are applied to Joomla! Extensions—open source and proprietary.
Open source licenses are so called because they generally come with a lot of freedom, and only a couple of rules. There are many different types of open source license, but the most famous and most common is the GNU General Public License, or GNU GPL license (http://www.gnu.org/copyleft/gpl.html). This is the license that Joomla! itself is distributed under and has the following major features: