Difference Between system.log and exception.log in Magento 1.9

From what I understand, the Mage logger will not function so early in the application spin up.

If you look at the Mage::log function itself, you'll find:

if (!self::getConfig()) { return; }

As Mage::getConfig() will return null until the application's config is initialised later on inside the Mage::run() function, the Mage::log function will exit without doing anything when called from index.php.

To test the logging is actually working, try placing your test later on, perhaps in Mage_Core_Controller_Varien_Front::dispatch which works for me.

Extensions are simply packed modules. In other words, you extend the features and functionality of Magento by writing a module. Then you have a choice to leave it as it is or pack it up (System > Magento Connect > Package Extensions). An extension (a packed module) is then published on magento connect