What does it mean when a drill says it is 3/8", and where do I get bits and extensions for it?
3/8 inch is the maximum shaft diameter that fits in the chuck.  That doesn't mean you can't drill larger holes, but the part the drill chuck grips has to be this size or smaller. (Some higher-powered drills have half -inch chucks.)

Bits should be widely available -- home centers, hardware stores, most places that sell tools.