I set the general direction in terms of major core functionality. This can be influenced by discussion and contributed code from the community. Sometimes this is influenced by moodle.com customers who pay for various features.
Various modules are run by various people, they take suggestions in the forums and on the bug tracker.
Contributors also work on their own pet projects all over the place. Many of them are in cvs:/contrib - we're planning to have these better available via a dynamic repository on this web site soonish.
The final inclusions in a release depend on what's ready and how stuff fits into the general plan.
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