Vanilla "extract" is the actual vanilla flavors extracted from vanilla beans by soaking them in a 30%-40% alcohol solution (usually about 35%). If you look at a bottle of "extract" it will tell you the alcohol content. Yes, it contains alcohol - no, you will not get the kids drunk if you use a tsp/tbs in a batch of cookies, or a cake, etc. The reason they use alcohol is because the flavors are fat/alcohol soluble - not water soluble. If they were extracted in fat they would not have a very long shelf life.
Vanilla "flavoring" or "imitation" vanilla is a mixture of chemicals that attempt to replicate the primary flavor in vanilla - vanillan. They do not contain alcohol - and they also do not contain all of the other flavors in real vanilla. So if the real vanilla flavor is important ... you might find the imitation stuff either "flat" and/or "bitter". Normally it can be substituted 1:1 for vanilla extract - but if it is double-strength, or triple-strength, they might be different ... look at the label of the bottle you have to see what it says.
Some people can't taste the difference ... some can.
Now, some people freak when they hear the word alcohol ... even in Halal cooking, which prohibits alcohol in any form, some forms are actually permissable (depending on sect and if the alcohol is intentional or incidental). The truth is that if you use any form of vinegar other than white distilled vinegar - the vinegar contains some alcohol ... something most people don't know.
"It ain't what you don't know that gets you in trouble. It's what you know for sure that just ain't so." - Mark Twain