n00bish question I know. Topic says it all.
A plug-in is a way to extend the functionality of a program (like Terragen) with additional, usually minor feature. There are only a few plug-ins available for Terragen, the major ones being WaterWorks, For Export Only, and SOPack. You can find more information about each one with a quick Google search.
- Oshyan
Do you need the full register version to use plugins?
No. I used to use the SO pack with Terragen 0.9x. As far as I know there are not any for Terragen 2 yet.
There are many node clip files available. These are sort of plug-ins. To use one, select 'Use Clip file' from the File Menu. Then connect the clip nodes to the shaders (more nodes, different type) that are appropriate. It may be 'Insert Clip File'. I do not have T2 running at the moment.
Download a plugin and read the ReadMe. It should say where to put the plugin. If it doesn't say, just put it in the Terragen 0.9 main directory, usually (on Windows): C:/Program Files/Terragen/
I have no idea what the main folder is on a Mac because I don't use one. Windows XP ftw! :D