"Extension of Stay" refers to the process of extending a non-immigrant status, e.g., H-1B, L, O, etc. It really refers to the extension of the Form I-94, which states a foreign national's STATUS in the U.S. It should not be confused with extending a "visa".
When one obtains an extension of stay, it means that one's status in the U.S. is automatically exended without first having to leave the U.S. to apply for a visa at a consulate.
There are special rules which determine whether one can obtain an extension of stay, or whether one has to leave the U.S. and apply for a visa at a U.S. consulate, and then re-enter the U.S. to obtain a particular status.
Normally, one must apply for an extension of stay before one's previous stay has expired, and while one is still maintaining that status. However, there are certain exceptions to that rule.
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