docs: Update docs accordingly

Author: rm3l

docs/dynamic-plugins/installing-plugins.md

@@ -46,6 +46,7 @@ When the `CATALOG_INDEX_IMAGE` environment variable is set, the `install-dynamic
 2. Look for a `dynamic-plugins.default.yaml` file within the image
 3. Use this file as the primary source for default plugin configurations
 4. Replace the embedded `dynamic-plugins.default.yaml` if it's present in the `includes` list
+5. Extract catalog entities from `catalog-entities/marketplace` directory (if present in the index image) to a configurable location
 
 ### Configuring the Catalog Index Image
 
@@ -57,7 +58,10 @@ The configuration method depends on your deployment approach:
 
 ### Catalog Index Image Structure
 
-The catalog index OCI image should contain a `dynamic-plugins.default.yaml` file at the root level with the same structure as the embedded default configuration file:
+The catalog index OCI image should contain the following at the root level:
+
+- A `dynamic-plugins.default.yaml` file with the same structure as the embedded default configuration file
+- Optionally, a `catalog-entities/marketplace` directory containing extension catalog entity definitions
 
 ```yaml
 # Contents of dynamic-plugins.default.yaml in the OCI image
@@ -70,6 +74,17 @@ plugins:
     disabled: true
 ```
 
+### Catalog Entities Extraction
+
+When the `CATALOG_INDEX_IMAGE` is set and the index image contains a `catalog-entities/marketplace` directory, the [`install-dynamic-plugins.py`](../../docker/install-dynamic-plugins.py) will automatically extract these catalog entities to a configurable location.
+
+The extraction destination is governed by the `CATALOG_ENTITIES_EXTRACT_DIR` environment variable:
+
+- If `CATALOG_ENTITIES_EXTRACT_DIR` is set, entities are extracted to `<CATALOG_ENTITIES_EXTRACT_DIR>/catalog-entities`
+- If not set, it defaults to `<dynamic-plugins-root>/marketplace/catalog-entities`
+
+**Note:** If the catalog index image does not contain the `catalog-entities/marketplace` directory, a warning will be printed but the extraction of `dynamic-plugins.default.yaml` will still succeed.
+
 ## Installing External Dynamic Plugins
 
 RHDH supports external dynamic plugins, which are plugins not included in the core RHDH distribution. These plugins can be installed or uninstalled without rebuilding the RHDH application; only a restart is required to apply the changes.