A good question. Extracts contain essential oils, though not in pure form. Just how diluted an extract is varies from essence to essence, though almost all extracts consist of an essential oil dissolved in alcohol. Why alcohol? Because as the old adage goes: oil and water don’t mix. Essential oils are, well, oils (sort of, anyway). Put’em in water and they run together for fear of water (they’re hydrophobes, remember), forming blobs. But alcohol is an entirely different matter…literally. On a molecular level it’s actually a chemical cousin of oil, and that helps the essential oil disperse evenly in it, spreading its aromatic goodness uniformly throughout the solution. Another thing that makes alcohol an excellent partner to an essential oil is that it is also volatile, or highly prone to evaporation, and thus helps essential oil molecules “take off”, as it were, into the air.
Of course not all extracts are made from real essential oils. Many imitations are made from synthetic substitutes and thus don’t possess anywhere near the complexity of the real thing. Though having said that, I confess I frequently do use imitation vanilla extract when I bake. Why on Earth? Simply because imitation vanilla extract (a synthetic vanillin called lignin vanillin, made from wood pulp) actually tastes more like vanilla than real vanilla when baked into things like cookies and cakes (where it’s an ensemble player). But then I’d never use it in something like a crème brûlée or pastry cream, where vanilla is supposed to be the centerpiece. There an imitation would feel lifeless and flat, as pretty much all other imitation extracts tend to be.