A module is initialized when the Alfresco repository loads the root Spring configuration for that module.
A module's root Spring configuration must be placed in the package alfresco.module.<module_id> and should be called module-context.xml.
When the module service is initialized, all the module-context.xml configurations found are loaded, thus initializing the installed modules ready for use.
The module-context.xml file is a standard Spring configuration file and typically new beans will be defined, custom content models and client configuration specified and data loaded or patched.
In a big module the configuration may be split up into smaller Spring configurations which are included by module-context.xml.