I was looking for an active web developers community and i found this site via google. Hope I m gonna ask you guys a lot of questions. Here I go.

Well I have a lot of confusions about wordpress. And I unfortunately could not find a satisfactory answer to my questions. So expecting a detailed answer.

To what extent we can customize a wordpress website?
for what kind of projects we should use wordpress.
Can we create a database oriented website in wordpress?

For example I want to create a website that will probably have Home | Products| Contact Us pages. And there will be two tables categories table and actual products table (where each product belongs to a category). Admin will like to add/modify categories and products later.

Should I use wordpress or simple php/CodeIgniter for developing this kind of project?

Welcome to Sitepoint!

Wordpress is primarily a blogging platform so it's best suited for posting date related, single entry content types. You can indeed extend it by using plugins or writing your own addons, but the further away from its blog roots you go the harder it becomes.

If you want a true Content Management System then look at something like Expressionengine which is based on Codeigniter.

Check out Symphony which is a standards based CMS that uses XML, XSLT, and MySQL. I have worked with this program alot and it is very powerful. The only thing is that it doesn't have the features of a normal CMS, you have to design the data models yourself, but this allows for extreme flexibility for developers, It has a learning curve and programming is required, but it allows you to tailor the CMS to your exact needs. This one is primarily for developers to create powerful custom CMS's for clients or those who are not afraid to get dirty in programming and design.

Otherwise it sounds like you going to want to use a shopping cart programming which provides the best out-of-box experience it sounds like you need. Look into Volusion and Zen Cart. Also check out OpenSourceCMS.com for demo of a lot of the most current and popular CMS's.