What do contract extensions mean really?

Basically all it says is if you keep doing well, we'll keep paying you. Am I wrong? Without a buyout what's the point? I mean Franchione had 5 more years at $2 million/year and he's gone.

So I guess I'm just asking why give a long extension if a. the coach can leave for another job without penalty, b.the coach will probably want a raise at some point during the extension meaning there will have to be a new contract, and c. if the coach isn't winning he'll be fired/asked to resign even if there are several years left on his contract?