Modding for the clueless

Not understanding even how programming works, I've never understood how it's possible to mod these games. As I understand the basic principles, the program is written in whatever computer language then compiled into binary. And once there, can't be translated back (?) so how exactly do you go about editing/changing what's there, and what are the limits of that? Apologies if this explained elsewhere, but couldn't find it, and everybody just seems to take it for granted.

To put it simple. It's not all in one .exe file. A game like vampire consists of several thousand different files. Some of them can be extracted from the game archives and edited. Others can't.

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