What is a plugin and what can they do?
Plugins are the simplest type of add-on to create and allow you to add new front-end template tags. These tags can be used to do all manner of powerful things - EllisLab themselves have released plugins to modify displayed data, read and display RSS feeds from external sites, and even mimic cron jobs.
Plugins can be used to keep PHP out of templates, which is often beneficial from a speed point of view
Plugins are the easiest add-on to develop as they are a single PHP file and require no installation other than placing in the appropriate folder.
Area of use: within templates