Under the extensions tab, you can only activate already installed extensions. These extensions are generally plugins written in a simple text format with a file extension *.rb (sometimes *.rbs) referring to the file type " ru by" (the scripting language of SketchUp plugins).
Some more complex plugins may contain other file formats, too (like images for toolbar buttons) and are generally placed inside a *.zip archive that you need to unpack to the same place where you would install *.rb files.
In SU 8, there is a possibility to rename this *.zip archive to *.rbz (or " Ru By Zip") and directly install the extensions/plugins with this "Install extension" button (i.e. you need not go to your Program files... > ... Plugins directory to manually copy/unpack files there). But you only use that button for these *.rbz files.