The idea of a "code pool" is to gather code in a systematic style for Magento. It is specified, when a new module is registered in app/etc/modules/Company_Module.xml. You can tell the system which code pool the module will be drawn from and enable or disable the module by creating an XML file.  Magento has three different kinds of code pools as below:  Core: Modules released with the standard Magento version make up the platform's core functionality.  Community: It includes modules created by outside parties.  Local: Locally created modules, such as code substitutions for the Mage framework.