On this part, we will make the text "Hello World" appear inside the Magento design.

For this, go to app/code/local/Engineering/Helloworld/controllers/IndexController.php and change its code to following:

<?php class Engineering_Helloworld_IndexController extends Mage_Core_Controller_Front_Action
{
	public function indexAction()
	{
	    $this->loadLayout();
            $this->renderLayout();
	}
}

A short explanation:
When calling to

$this->loadLayout();

Magento will go to "app/design/myinterface/mytheme/layout" (on a fresh Magento installation, it actually "app/design/base/default/layout") reads all the XML files and searches there for a tag named layout and loads the found data to "core/layout" object.
Now, when calling to

$this->renderLayout();

the layout will be rendered.

Now lets go to www.mysite.com/helloworld - we will see some empty standard Magento design. It's because only tags get loaded.

Now go to app/code/local/Engineering/Helloworld/etc/config.xml and add some change to it:

<?xml version="1.0"?>
<config>
 <modules>
  <Engineering_Helloworld>
   <version>0.1.0</version>
  </Engineering_Helloworld>
 </modules>
 <frontend>
  <routers>
   <engineering_helloworld>
    <use>standard</use>
    <args>
     <module>Engineering_Helloworld</module>
     <frontName>helloworld</frontName>
    </args>
   </engineering_helloworld>
  </routers>
  <layout>
   <updates>
    <engineering_helloworld>
     <file>helloworld.xml</file>
    </engineering_helloworld>
  </updates>
  </layout>
 </frontend>
</config>

This tells magento to regard the file named helloworld.xml as another layout file. Now create the helloworld.xml at:
app/design/frontend/default/default/layout/helloworld.xml
Type in the following:

<?xml version="1.0"?>
<layout version="0.1.0">
 <engineering_helloworld_index_index>
  <reference name="content">
   <block type="core/template" name="helloworld.text"
   template="engineering/helloworld/sayhello.phtml"/>
  </reference>
 </engineering_helloworld_index_index>
</layout>

Because the URL is www.mysite.com/helloworld/index/index magento will load the content of <helloworld_index_index> tag to the layout object.  Afterwards, the

$this->renderLayout();

will put the block named "helloworld.text" to the block named "content",  load the block class "core/template" (Mage_Core_Block_Template) and template "engineering/helloworld/sayhello.phtml" (app/design/frontend/myinterface/mytheme/engineering/helloworld/sayhello.phtml)  for this block.

Now, create "sayhello.phtml" at
app/design/frontend/default/default/template/engineering/helloworld/sayhello.phtml
type there just

Hello World

Now, go to www.mysite.com/admin/helloworld - you should see the text "Hello world" inside magento design.

In this tutorial we will create a Magento extension step by step. our extension will print "Hello World" to the screen.

Go to "app/code/local" and create a new folder. name it "Packagename" - the "Packagename" is likely to be your company name - this folder will serve all the extensions that will be made by your company. I'll call it "Engineering".

Inside the "Packagename" folder, create another folder named "Modulename" - the "Modulename" is the name of your module - I'll name it "Helloworld". now we should have the following path:

app/code/local/Engineering/Helloworld

Now you have to tell Magento about your extension, so create a file named "Engineering_Helloworld.xml" in the following path:

app/etc/modules/Engineering_Helloworld.xml

type in the following:

<?xml version="1.0"?>
<config>
  <modules>
   <Engineering_Helloworld>
    <active>true</active>
    <codePool>local</codePool>
   </Engineering_Helloworld>
  </modules>
</config>

Magento is a configuration-set MVC system. that means, if you want the URL

www.mysite.com/helloworld/index/index

will display "Hello World", you need to tell Magento about this. Create a file named "config.xml" in the following path (create the etc folder, also):

app/code/local/Engineering/Helloworld/etc/config.xml

type in the following:

<?xml version="1.0"?>
<config>
 <modules>
  <Engineering_Helloworld>
   <version>0.1.0</version>
  </Engineering_Helloworld>
 </modules>
 <frontend>
  <routers>
   <engineering_helloworld>
    <use>standard</use>
    <args>
     <module>Engineering_Helloworld</module>
     <frontName>helloworld</frontName>
    </args>
   </engineering_helloworld>
  </routers>
 </frontend>
</config>

A short explanation about the config.xml tags:
The <use> tag in the <router> hierarcy, tells Magento whether the <router> tag refers to admin url or the frontend url. we want the URL www.mysite.com/helloworld/index/index, and not  www.mysite.com/admin/helloworld/index/index, so that means we need the frontend. the <use> is "standard" (other options are "admin" and "default").
The tag <engineering_helloworld> under <routers> seems to be arbitrary, but sure, there are conventions, so you need to write your full module name in lower case.
The tag <frontName> tells Magento about the first string of your extension's URL, so the URL is:
www.mysite.com/helloworld/index/index
and not, for example
www.mysite.com/byeworld/index/index
[Note: you have to make sure that the term "helloworld" isn't already occupied by other extension or core module, otherwise the Magento's behavior will be unpredicted.]

Now it's time to write the code for the output "Hello World":
For us, to make the page

www.mysite.com/helloworld/index/index

display "Hello World", we need to create a file named "indexController.php" at:

app/code/local/Engineering/Helloworld/controllers/IndexController.php

and type in the following code:

<?php
class Engineering_Helloworld_IndexController extends Mage_Core_Controller_Front_Action
{
    public function indexAction()
    {
    echo "Hello World";
    }
}

Now, go to www.mysite.com/helloworld/index/index, and you should see the desired "Hello World".
So, actually, when you go to www.mysite.com/helloworld/index/index, Magento is looking for a front name "helloworld" through all the active module configurations. if found, it searches for indexController. if found, it's looking for
indexAction inside that controller.
Now try to go to www.mysite.com/helloworld - you should see the same result, this is only because when nothing mentioned after the module name, Magento looking for index/index by default.

On the next post, we will add some design to our extension page - so don't go anywhere :-)

Writing Magento Extension – part2