2

If you have 2 extensions each with an observer on newsletter_subscriber_save_after how does the system decide which extension runs first?

4

The observers are registered and therefore also executed in the order the corresponding extensions are loaded. You can read more about the load order in the blog post by Alan Storm. Just a short hint: You can force that your module A is loaded before another module B by placing a depends tag into your app/etc/modules/Namespace1_ModuleA.xml:

<depends>
    <Namespace2_ModuleB/>
</depends>
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