The Add-ons System:
One thing that really makes Kodi stand out from other media centers is the ability to install add-ons. These are very much like apps that you might install on a smartphone or tablet and can access almost any content that's available on the web. Below we'll just go through the very basics.
What Is An Add-on?
As previously mentioned an add-on is very much like an app you may get on a tablet/smartphone. These are created by developers for free and in their spare time, it's an open source project so anyone who wants to learn coding (python) can contribute. An add-on can do many different things but the most common use is for accessing online content and showing the results in an easy to view list, a good example is ListenLiveEU which will list all the thousands of radio stations available and the user simply clicks on one and it plays. No annoying popup ads that you might get on the relevant website, add-ons bypass all that to bring the content direct to you and with no chance of picking up malware or viruses.
What Is A Repository?
Each add-on developer has their own online directory that contains all their work - these directories are known as "repositories". To install their add-ons you have to install the repository first and once that's installed Kodi will be able to list everything they have available to install. There is a way to install add-ons directly from a zip file, this is NOT advised. If you install an add-on but not the relevant repository Kodi will not auto-update the add-on when it's broken. Believe me when I say you really do need add-ons auto-updating, they need a LOT of maintaining by the developers so if you don't install the repository first you'll soon get frustrated with script errors or playback failure due to the add-on not auto-updating to the latest version on your system.
A source is not a repository!
A common mistake is to think a repository is the same as a source you add in file manager. The reason this is such a common mistake is down to certain blog sites and YouTube guides giving completely incorrect advice, often just so users will visit their site more often for a "fix" which results in more advertisement money for them. You can usually tell the good sites from the bad, if they're telling you to install a zip file of the add-on (possibly re-uploaded to their source or hidden behind an adfly link) opposed to giving the link to the official developers repository you know they're only in the game to make a quick buck. ALWAYS install the repository file. An example of a source is "http://noobsandnerds.com/portal" - this is nothing more than an easy way to obtain zip files, if you want to you can safely remove these sources from the Kodi file manager once you've installed the relevant repository zip file you were looking for.
Where does addon content come from?
If you're using an add-on that accesses some kind of video, audio or images then it's almost certainly grabbing that content from a website. If you use the YouTube add-on then the stream is coming from http://www.youtube.com , Filmon = http://www.filmon.com, flickr = http://www.flickr.com etc. Some add-ons grab content from multiple websites (iStream, Exodus, Velocity are good examples) and although this has the benefit of having more sources to choose from it requires much more maintenance to make sure the "resolvers" are up to date.
All this content is freely available on the web so why even use Kodi to access it?
There really are a number of reasons users prefer to use Kodi rather than a web browser but below are the more obvious:
1) Add-ons are virus free
2) No annoying adverts or popups
3) Most addons can bypass the need for the annoying captcha screens
4) The built-in Kodi player allows for some brilliant functions such as audio sync, video upscaling, subtitle support etc.
5) Most add-ons allow for pause/rew/fwd/resume features that you may not get in a web browser.
6) Website content can be viewed in easy to find lists and search functions can be easily added.
What are the downsides of using addons?
There aren't many obvious downsides but here are a few:
1) If a website has a very slight change in it's layout or security the relevant Kodi add-on will most likely fail and need re-coding. See "Resolvers" section below.
2) Live streams are more likely to fail from within Kodi than on a web browser. A dropped packet can mean you get kicked out of a stream.
3) DO NOT presume the content you're accessing is legal in your country. As a general rule any add-ons located on the official Kodi.tv repository access legitimate content (always check the laws in your country first though).
What are "Resolvers"?
Kodi is NOT a web browser. Just because you can view something directly on a website that does not mean it will work in Kodi. Add-ons are coded to mimic a web browser, bypass relevant security checks and popups then eventually extract the final link to the content. Generally speaking website owners do not like Kodi to access their content so they try and make it as difficult as possible to access the content. Most sites make money from adverts (hence the massive amount of pop ups on most streaming websites) and so it's no surprise they try and change their code so it breaks Kodi add-ons on a regular basis. Each website is unique meaning completely different add-on code is needed in order to get the final link to the content, this code is known as a "resolver".
A lot of add-ons use a module called Universal Resolver which contains all the code needed to access lots of different websites, the downside of using this is it's not maintained as regularly as some developers would like. Some developers use their own resolvers so they are in total control of the add-on, this means a lot more work on their behalf but it does mean you may get a fix within days opposed to it taking weeks as can sometimes be the case with the universal resolver. Chances are if a website has changed it's security you'll not be able to play streams from that particular site for many days (until a dev fixes the resolver) and this will usually have a knock-on effect on various add-ons as lots of them use the same sources, luckily there are lots of sites out there so usually plenty of alternatives.