This is a post that tries to explain the basic ideas behind and differences between terms like Macros, Scripts and AddOns to those who are either beginners to using such things or to making such things. All credits go to Legorol from the Hellscream server who posted this on the official Interface Customization bord.
Slash Commands
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To understand how everything else works, first it's useful to know what a Slash Command is. WoW allows you to give simple commands to the game in the form of a slash (/) followed by the name of the command. You can give these commands directly by typing them into the chat box. An example would be the "/follow" command. If you target a friendly character and type "/follow" (without the quotes), you start following them. You can get a list of some of the slash commands by typing "/help".
Here is the official sticky the EU forum which gives the complete list of all slash commands:
http://forums-en.wow-europe.com/thread.aspx?fn=wow-interface-en&t=7&p=1&tmp=1#post7
There are several types of slash commands, a lot of which you may already be familiar with (such as /1, /p, /g). Some are designed to perform game actions (e.g. /follow, /assist, /cast), others are chat related commands (e.g. /yell, /chatlist) or give you information (/who). You also have emotes (/laugh, /bow).
Finally, there is one very special slash command "/script", which I will explain later.
Macros
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The purpose of a Macro is to allow you to create some very simple custom actions or tasks, based on the existing game actions. A macro is just a sequence of slash commands, which are executed immediately and in order when you execute the macro. To create a new macro, either type "/macro" (without the quotes), or click on the speach bubble next to the chat box and select macro. You can then give a macro a name, an icon and type in a few lines of slash commands. The macro is created in the form of an action that you can drag onto your hotbar. You can activate the macro by clicking on the resulting button on the hotbar.
An example macro would be:
/cast Fireball(Rank 1)
/yell "I am frying it!"
This macro merely casts a fireball, and then yells for everyone to hear that you have done so.
Macros have some severe limitations, and are only intended for very very simple tasks.
FAQ:
Q: Can I cast two or more spells in a macro?
A: No. The most important limitation is that you can not cast more than one spell using a macro. This limitation is there so that macros can't automate too much for you. You can have as many other commands within the 256 character limit as you like.
Q: Can I wait between commands in a macro?
A: No. There is no command for waiting or pausing in a macro.
Q: Can I make a macro that casts different spells?
A: Yes. It is perfectly possible to make a macro that casts a different spell each time you run it, perhaps cycling through a list of spells. The limitation is one spell cast per keypress or mouse click (i.e. one spell cast each time the macro is run), but that one spell can be different each time.
Scripts
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Usually, not just in WoW, the term Script refers to a short to medium length program, written in some kind of simple programming language (called a scripting language). The purpose of a script is usually to control another program.
World of Warcraft has a powerful programming language called Lua embedded inside it, which is used for scripting. What this means is that WoW is able to understand and execute little programs written in the Lua language. However, in WoW, a script is usually not something that you use by itself, i.e. you don't just type in a script and execute it (although this is also possible). Instead, there are several places in WoW where you have the option to enter scripts as part of something else.
The kind of places that you can use a script in:
[li] /script [command] : If you type the slash command "/script" in the chat box, you can follow it with one or more valid Lua language statements (i.e. a script), separated by semi-colons (;).
[li] Macros: you can enter scripts as part of macros, by putting one or more "/script" command in your macro.
[li] User Interface modifications and AddOns: You can read more about these below, but the main point is that these are all created using Lua scripts (and also XML technology, but don't worry about that right now).
In all the cases you can use scripts in, the things you can do with the scripts are the same.
So what can a script do? There are many resources on Lua scripts. Some of the links that are useful:
http://www.lua.org for an explanation of the language
http://www.wowwiki.com for reference material
The most important point however is that scripts are able to perform many more game actions than slash commands. This is done via a set of functions (called API or Application Programming Interface) that WoW makes available for use in scripts. Here is a link to a quite extensive list of all the API functions available for use in scripts:
http://www.wowwiki.com/World_of_Warcraft_API
After all that explanation, here is an example of a script. [/pre] if (IsPartyLeader()) then
CastSpellByName("Fireball(Rank 1");
end[/pre] This script is very simple. When you execute this script, if you are the party leader, then you cast a fireball. To use this script, you could do so for example via the "/script" command. E.g. you could type this: [/pre] /script if (IsPartyLeader()) then CastSpellByName("Fireball(Rank 1"); end[/pre] directly into the chat box. Or you could make that line part of a macro, so that it's reusable.
In summary: a script in WoW is a short program written in the Lua language, able to interact with the game and perform game actions. You use a script by including it as part of something else, e.g. by putting it in a macro via the /script command, or by putting it in a UI Mod or AddOn.
User Interface Mods and AddOns:
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Blizzard has made the decision that the user interface of World of Warcraft is fully customizable, modifiable and extendable. This is completely legal, and is encouraged by Blizzard. A User Interface Modification (UI Mod for short) and AddOn is exactly the same thing, the difference is merely in their names. Usually Mods tend to refer to smaller things that only modify existing funcionality of the user interface, whereas AddOns tend to add extra functionality. From now-on I will collectively refer to anything that customizes the WoW UI as an AddOn.
AddOns are created using the Lua scripting language mentioned above, and XML technology. They are pretty powerful and can often do more than merely add fancy buttons and windows on your screen. I will not go into the gory details of how you create these, there are many excellent introductory guides around. Here is a link you will find useful if you are interested in more details:
http://www.wowwiki.com/Interface_Customization
From a user's point of view, what you need to know is that AddOns come in the form of one or more text files, ending in the ".xml" and ".lua" extensions. These files are supposed to go into a folder called Interface in your World of Warcraft folder, or into one of it's sub-folders. Usually AddOns are distributed as zip files by their authors, and you "install" them by simply unzipping them in your World of Warcraft folder. (If you don't see an Interface folder, don't worry. It is not there by default. If you want to put anything into it, you are free to create it yourself).
Warning: Be very very careful with AddOns that come as executable ".exe" files. Always triple-check before you use these to make sure that they really do what they say they do, as executable files can do anything whatsoever to your computer. AddOns are supposed to be written in text format in .xml and .lua files, so that anyone can check that there is nothing malicious about them. You have no such check available with executable files. Also, since AddOns only operate within WoW, they can't harm your computer, whereas executable files can.
Having said that, lot of authors distribute their AddOns as executable files. These executables most of the time don't do more than just unzip the AddOn's files and place them in your WoW folder in the appropriate places. Occasionally the executables are used to automatically download updated versions of the AddOn, or to upload data collected by the AddOn (for example item statistics to be put on a web-site etc.).
Installing: You usually install an AddOn by simply unzipping the file it came in into your World of Warcraft folder. Sometimes you have to copy the AddOn's files into its place manually. Each AddOn lives in its own folder, and you should end up with a folder structure like this for each AddOn:
World of WarfratInterfaceAddOns<addon name>
Uninstalling: You can always uninstall any AddOn by deleting the AddOn's folder. You can reset the WoW UI to its default state by deleting the World of WarcraftInterface folder.
Cosmos, CTMod, Gypsy, Nurfed and other AddOn packages:
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If you look around the forums a bit, you will see names like Cosmos, CTMod, Gypsy and Nurfed popping up. These are major AddOn packages that contain a large number of UI AddOns. Their authors (often working in teams) are respectable members of the WoW community who have worked hard to create useful (and sometimes not-so-useful) AddOns for your gaming pleasure, and have bundled them together into one easy-to-use package.
Feel free to use any and all of these packages. They are legal, Blizzard allows and encourages their use, although you won't get technical support from Blizzard if something is wrong with them. There are many of these around, download and try a few of them and see if you like them. Usually the authors make these packages highly configurable so that you can adjust them to your needs.
Note: a lot of these major AddOn packages conflict with each other, so you won't be able to use them together.
Standalone, pure AddOns, what's so good about them?
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You will often see AddOn authors being proud of their AddOn being "standalone", or "pure addon". In the past, often AddOns modified existing UI functionality by changing something in the existing, core UI files provided by Blizzard. This has lead to conflicts as different AddOns all tried to modify the same file. A "pure addon" is one that does not modify any existing files, and merely adds its own files. This is a very good thing, because you can have any number of such AddOns happily coexisting side-by-side.
Also, a lot of AddOns depend on other AddOns for their operation. For example, most AddOns in the Cosmos package wouldn't work by themselves, and need some of the core AddOns in the Cosmos package to be present to work. A "standalone" AddOn is one that is capable of working by itself, with nothing more than just that one AddOn being present. Again, this is a good thing, because it allows you to pick and choose just those exact AddOns that you want, without having anything you don't want.
Having said that, from the point of view of an AddOn's author, you will find that often a lot of AddOns do very similar sort of things. It is much more easy and quick for an AddOn author to create a new AddOn if they can rely on existing functionality in other AddOns or some common core "libraries". That's why there are AddOns out there that depend on things such as the "Sea" function library, which in itself is just a core AddOn. If you find an AddOn that requires some other core AddOn, don't be afraid of it. Just make sure you also download the core AddOn.
Think of this as how a lot of games nowadays depend on DirectX on the PC. Game authors can write their games much quicker knowing that the user's computer will provide them with the functionality they need in the form of DirectX. If you are happy about running games that require DirectX (such as WoW), you should also be happy about running AddOns that require other, common core addons.
- Updated description: Reduces the mana and focust cost of all shots and abilities by you and your pet by 20/40/60 while under the effect of Rapid Fire, and you gain mana equal to 50/100/150 of the damage you do under the effect of Rapid Killing over 6 sec. 
