I'm lost as far as how do I work with existing deployment of VMSS which I perfomed using template in powershell. For example I want all VMs to have additional extension installed now and this was not part of original template. How do I add this extensions to all machines?
You can simply deploy the template again. It will only deploy the difference (so make sure you use the same username/password etc!)
minor edit: if you have upgradePolicy.mode set to "Manual", you will also have to do a "Update-AzureRmVmssInstance" call on each VM you want updated; if it's "Automatic", it will go out to all VMs automatically in parallel; if it's "Rolling" (preview here: https://github.com/Azure/vm-scale-sets/tree/master/preview/upgrade), it rolls out in batches.