terminology, an extra is a person
who is seen onscreen (or, less frequently, heard in the background) but is not prominently featured and does not have a defined role aside from being "background color".
That said, without extras most movies and television shows would be completely unrealistic. No matter how hard you think, I'm willing to bet you can't name a single Hollywood movie or television show that did not use extras.
Imagine, if you will, watching ER and seeing the doctors rushing around frantically and attempting to convey a sense of urgency...but without any extras rushing through the scene in the background or brushing past the doctors as they walk through the halls. It would look awkward, eerie, and would probably even be a little disturbing. Even sitcoms and commercials frequently feature extras.
You know in Friends when they're sitting on the couch in Central Perk? All those other Central Perk patrons behind them are extras. Occasionally, the script will call for a cast member to speak to or interact with an extra in some way. In this case, that particular extra would be called a "featured extra", and would probably get paid more than a regular extra.
Extras casting, the job of actually finding people to be extras, is done by a casting director. Quite often, extras casting is done by a casting director who specializes mainly in casting extras, since it's such an enormous undertaking. Due to the massive number of feature films, television shows, commercials, infomercials, etc. that are shot every day in places like California, New York, Florida, Vancouver, B.C., Nevada, and even Oregon, it is surprisingly easy to get hired as an extra.
If you've got your sights set on being an extra, there are several ways to accomplish your goal. The easiest and most effective way would be to find out who does extras casting in your area and give them a call. Most extras casting directors (the good ones, anyway) keep large databases of people who want to be extras. That way, when a feature film rolls into town and needs fifty red-haired midgets who know how to ride horses, the casting director can simply consult his database and call people up rather than frantically scouring the city at the last minute.
Usually you will be asked to pay a small fee to cover the cost of maintaining your file, but then you will be kept in the casting director's database and if they get hired to cast a project that they think you would be good for, they'll give you a call. A good casting director will try to give some work to as many people in the database as possible. However, if you're rude, impatient, unprofessional or annoying, the casting director will do his best not to hire you. So be good.
Before you get your hopes all up about making a living in movies by being an extra, let's talk about money. Extras do not get paid a lot of money. For most projects, you will be paid slightly more than minimum wage. If you're required to be on set for an extremely long time or do something embarassing, dangerous, dirty, wet, etc. then you will be given a "bump" (a bonus). However, even if you think you could live off minimum wage, remember that extra work is not a steady job (unless you are one of the very lucky few who can manage to get routinely cast as a featured extra).
That said, working as an extra can be a fun experience and provide you with a little bit of extra cash on the side. It's more of a hobby than a job, and it can be quite rewarding if you're interested in film or television production. If you're lucky enough to get used in a major motion picture, you may even get to meet some big Hollywood stars (although you should never ever try to talk to the actors unless they talk to you first!)