What is codePool in Magento?

codePool is a tag which you have to specify when registering new module in app/etc/modules/Company_Module.xml

There are 3 codePools in Magento: core, community and local, which are resided at app/code/ directory.

Core codePool is used by Magento core team, Community is generally used by 3rd party extensions and Local codePool should be used for in-hour module development and overriding of core and community modules for custom requirement.
So in short, codePool helps Magento to locate module inside app/code/ for processing.

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Basically in magento, we need to define code pools so that Magento can understand path to find files for extensions/ custom functionality. The motive of code pools is to keep the magento core separate from modification either by us or 3rd party extensions.

Magento has three different codepools:

1. Core
2. Community
3. Local

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CORE:
Core folder contains all of the base classes where Magento gets its flexibility and functionality from. It is suggested not to change any code in core files as while upgrading to latest version of magento all files will overwrite.

COMMUNITY:
Community folder belongs to community developers. All 3rd party extension installed extension files resides in community folder in magento. So, if you have installed any extension in magento, it must be in app/code/community/ only.

LOCAL:
If you are a Magento developer & have an intend to change the logic functionalities, blocks or methods, copy the necessary folders from the Core pool to Local pool, you can use Local folder. If you want to override Magento extensions, and do whatever you are inclined to do.

Thanks for sharing great information about codepool, Great learning.

adding some few topics about codePool,
Codepool is a tag of xml file. There are 3 types of codepool
1, Core which is developed by magento core developer
2, community which is used by 3rd party extensions - open for all developers
3, Local- If you have a magento site, your extensions will be there in local.

Codepool is a tag of xml file. There are 3 types of codepool
1) Core which is developed by Magento core developer
2) Community which is used by 3rd party extensions - open for all developers
3) Local- If you have a Magento site, your extensions will be there in local.

This is help to improve my knowledge

Codepool is a tag which we use whenever we add any new module to specify the pool in which its code is lying. There are three types of codepool

1. Community
2. Core
3. Local

1. Community:- This pool belongs entirely to community developers. All the third party modules lies in this pool. So if you have installed any extension, it must be in app/code/community/ only.

2. Core:- This pool stores all the core functionality of magento that makes Magento so powerful, flexible. It is not recommended to make any change in it as it may cause problem while upgrading magento.

3. Local:- if you have your own Magento-based store and want to make everything by yourself or you are a Magento developer and have a purpose to change the logic somehow, local pool is the place where everything should be done

By default local is loaded first then community then core.


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Basically In any Magento Extensions we need to define code pools so that Magento can understand where to Find Files for that extensions.

Magento has three different codepools:
Community (app/code/community): All extension that we install from Magento Connect that will be found in Folder
Core (app/code/core): All existing feature of Magento code exists in this Folder.
Local (app/code/local): This code pools also for community developers as well as store owners who want to make their work by their own.

Center codePool is utilized by Magento center group, Community is commonly utilized by outsider augmentations and Local codePool ought to be utilized for in-hour module advancement and abrogating of center and network modules for custom necessity. So to put it plainly, codePool causes Magento to find module inside application/code/for preparing.

Focus codePool is used by Magento focus gathering, Community is regularly used by pariah developments and Local codePool should be used for in-hour module progression and revoking of focus and system modules for custom essential. So to say it obviously, codePool urges Magento to discover module inside application/code/for getting ready.