AEL about Extensions and priorities
A Context contains zero or more Extensions. There are several predefined extensions. The "s" extension is the "start" extension, and when a device activates a context the "s" extension is the one that is going to be run. Other extensions are the timeout "t" extension, the invalid response, or "i" extension, and there's a "fax" extension. For instance, a normal call will activate the "s" extension, but an incoming FAX call will come into the "fax" extension, if it exists. (BTW, asterisk can tell it's a fax call by the little "beep" that the calling fax machine emits every so many seconds.).
Extensions contain several priorities, which are individual instructions to perform. Some are as simple as setting a variable to a value. Others are as complex as initiating the Voicemail application, for instance. Priorities are executed in order.
When the 's" extension completes, asterisk waits until the timeout for a response. If the response matches an extension's pattern in the context, then control is transferred to that extension. Usually the responses are tones emitted when a user presses a button on their phone. For instance, a context associated with a desk phone might not have any "s" extension. It just plays a dialtone until someone starts hitting numbers on the keypad, gather the number, find a matching extension, and begin executing it. That extension might Dial out over a connected telephone line for the user, and then connect the two lines together.
The extensions can also contain "goto" or "jump" commands to skip to extensions in other contexts. Conditionals provide the ability to react to different stimuli, and there you have it.