What do people mean by "Extracting"

I'll see people say like, "To install the mod, extract into Documents/Beamng.drive/mods, etc etc. And I don't exactly know what that means. I've gotten quite a few mods installed by just dragging and dropping the mod zip file either into the mods folder, or making a vehicle folder inside of the mods folder. But, some mods don't work. Is there another way of doing this? Is it this extracting I keep seeing? I know this community is amazing, please help.

 

That's extracting. And if the mod won't work, then it's probably outdated or something because that's the right way to do it unless the intructions say otherwise.

 

Alright, thanks. I used to play Minecraft, and people talked about extracting mods all the time, and before I used to actually extract them with winrar and everything, I was just hoping this wasn't the same.