Dispatch Event Creation in magento

You can create an event with the Mage::dispatchEvent method. If you have an object like the order then you have to define a parameterlist as Array. array( 'order' => $order)
Just implement following line to your extension class:
Mage::dispatchEvent('the_event_name',array( 'order' => $order));


To observe an event, specify the observer in the config.xml at /app/(codepool)/Extensionname/ .
<config>
  <global>
    <events>
      <the_event_name>
        <observers>
          <extensionname>
            <type>singleton</type>
            <class>Extensionname_Model_Observer</class>
            <method>methodName</method>
          </extensionname>
        </observers>
      </the_event_name>
    </events>
  </global>
</config>

Create an Extension and a model (Observer.php): /app/(codepool)/Extensionname/Model/Observer.php

class Extensionname_Model_Observer
{
    public function methodName($event)
    {
        $order = $event->getOrder();
        //for example send a new order mail to customer
        $order->sendNewOrderEmail()->setEmailSent(true)->
        save();
        //do something else ....
    }
}