I have began to decipher how mods work.
When you download a mod from the list server, or a local mod, you decompress its contents into the mods directory, which is why you end up with a set of directories there.
The files that are decompressed also include information files with the name and type of the module, licensing information, listing and development pages as well as installation information.
As part of the mod install - it uses its config file to specify where to copy files in the mods from, and where to. Normally from the directories under the mods tree, to directories in the real wiki tree.
With mod it is not merely enough to download them, but you must make sure you have pressed the install button too.
I hope that helped.