Are the extensions the same? In other words, do they both end in .ppt as in 97-2003.ppt and 07-2003.ppt? It is possible to do a "Save As" on a file which may change the file type (and the extension). For instance, you can save a PowerPoint as a native .ppt file or as a a Web Page .html. They would have drastically different file sizes.
As far as how extensions work, they are cues to the operating system to use a certain application to open the file. For instance, double clicking on the file picture1.bmp would start the application MS Paint which in turn would open the file picture1.bmp.
By the way, Windows XP and Vista, by default, hide the extensions. You can view the extensions by starting file Explorer, click on Tools | Folder Options|View. Uncheck Hide Extensions for Known file Types.
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Okay, the new info helps. When you save as a 97-03 file , it saves it under the old format, which as you see is quite bloated. The new 07 PowerPoint saves it under the New MS Office 2007 .docx, .pptx formats which is based on xml. You wan't be able to view the the 07 formatted .pptx in older PowerPoint versions, unless you download the converters.
By the way, your question is fine.