Alright, heres an explanation:
Mods are basically changes to the coding of small things in Mabinogi, the .dlls first. The .dlls are written in C++, a programming language. Mods alter those in order to let you do different things than what Nexon/devCat originally made. Then theres the data folder. The data folder is modeled after the REAL data folder (the package files), and lets you replace stuff in the REAL ones with ones in the data folder.
Mods currently available: Gerent (has a data folder similar to Tiara R69), Stand-alone Nogiparty(no data folder), Tiara R69 (has a data folder for reducing lag), Frontend (Has ALOT of mods, and little customization)