Comments: Application Extensions
2 - App files should be in app directory
Small typo or misunderstanding. You should not modify the files in the core. You can copy them if you want, though. But the files described and the ones you should modify and play with should be located as stated.
The above section could be read like this:
AppController (should be created at /app/app_controller.php), AppHelper (should be created at /app/app_helper.php) and AppModel (should be created at /app/app_model.php) are great places to put methods you want to share between all controllers, helpers or models.

By jnelson11 on 6/9/08
1 - Looks like an update is needed
I don't think that in cake 1.2, AppController, AppModel etc are located in the /app/ directory.
If any first timers are looking for them, they are in the /cake/libs/ under respective sub directory, AppModel in the /cake/libs/model dir etc.