Develop "Hello world" Magento extension

To develop magento extension, first of all, we must understand about Magento Folder Structure. It you are doing some update but no changing, try to disable Magento cache at System/Cache Management.
All magento extension should be place in /app/code/community. In /app/code you also see core folder, sometime may be local folder which is created by other extension. The community or local called Code Pool.