Plugins are compiled libraries that add extra functionality to AGS, often which cannot be realised, or at least quickly enough, with scripting. For example, the AGS 3D plugin runs much faster than the 3D module and thus can do texture mapping instead of just solid colour.
There are also Editor plugins that add functionality to the editor, rather than the game. However, none of these have ever taken off or worked fully.
Many plugins have been released over the course of AGS and some older ones are not compatible with the latest AGS version. Also many have been supplanted by Script Modules or by new features of the AGS engine itself.
The AGS website has a guide to writing your own plugins