[eluser]wiredesignz[/eluser]
Matcbox enables you to modularize an ordinary CI application. It basically manages the routing of URL calls into the modules directory.
Modular Extensions adds more features to CI in that modules have component like functions. They can perform many different jobs limited only by your imagination and should be made to enhance your CI application.
The idea was to have modules as plug and play services, so if you wrote a module for something like google adsense, anyone could use it. In addition to that modules can be used as HMVC controllers and they can help you build view partials.
EDIT:
FAL = FreakAuth Lite
EDIT-EDIT:
As you would take a web page and break it down into view parts (search, nav, header, footer etc) you would create a module to provide the functionality behind each of those parts, not just to render it, but to manage it based on the application state.