Mathematically, Extrapolation is a way to make guesses about some hypothetical situation based on data that you already know. 
For example, read this line : he stepped out of his black BMW.
You extrapolated him to be a rich man.
But factually, he was working as a driver in a big company. 
That is exactly what happens in a exam or share market or relationship.
We all extrapolate based on our experience on that subject matter. When faced with a new decision which we don't know mind extrapolates from what we know to what could be the answer to current problem. People with gaps in their knowledge and training are likely to extrapolate to wrong conclusions.
That is the role of experience and training you learn to "extrapolate" correctly.

Try this Question now:
Light bulb sign on xray is seen in-posterior dislocation of shoulder.
Now, if you do only so called MCQ guide books and have not studied the concept.
Imagine getting a question in exam :
Which shoulder dislocation is easier to identify on xray?
your mind is likely to extrapolate to posterior while the answer is anterior. Posterior dislocation is actually tough to identify.
That's the risk of fragmented knowledge.
Extrapolation is an inherent human trait. Our subconscious works faster than conscious and uses extrapolation to solve things that we don't know.
Winners extrapolate correctly and others make blunders.