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A plug-in is a program that websites can require. They were necessary when browsers weren’t evolving fast enough - like back in the Internet Explorer 6 days - but now need to go away. An extension or add-on adds a new feature to your browser that you can use, if you like.
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Note that browser plug-ins are different from extensions, or add-ons. They aren’t sandboxed - except on Chrome, and even that sandbox won’t protect you from everything. If an attacker finds a hole in your browser plug-in, they can generally exploit that hole to gain access to the system. Chrome uses PPAPI, which is designed to provide additional sandboxing - but even it isn’t ideal.
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Internet Explorer uses ActiveX, which is notorious for its security problems. Firefox still uses the NPAPI plug-in system created for Netscape Navigator.
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