Files in Windows typically use a three character file extension to identify the file type. If you are not seeing the file extensions, you have file extension view turned off in Windows. For safety reasons it is better to have this turned on, so that you know exactly what kind of files you are dealing with.
File extensions can be more or less than three characters in length, some are 2 characters and even newer office versions are using 4 character lengths (eg: .docx).
Generally Windows is able to identify most of the file types on your system. However, with some obscure file types, Windows may not be able to figure out which software is required to open the file. In some cases you may have removed the software and it can now be difficult to figure out how to open it.
Another problem that occurs with file extensions is when Windows loses the assocation for that filetype. In Windows you can change the file associatons by going into Control Panel -> Default Programs -> Set Associations. From here you can set any type of file extension to be opened with the correct software. This will fix most problems assuming you have the right software installed.
If you don't know what type of software to use for a particular file extension, you may need to search the net. There are so many different file types, that it can be hard to list them all. A quick search online should reveal the answer in just a few seconds.
Alternatively, you can use software to identify and fix your file extension problems. This software can tell you what to use for particular file extensions and if the file extension is valid. This can be handy in the case of files that may be missing their extension altogether.
You can check out Total PC Health software for a free file extension helper.