diff --git a/examples/config-extends/app.vue b/examples/config-extends/app.vue
index 18f3c2b3f4..bea4876876 100644
--- a/examples/config-extends/app.vue
+++ b/examples/config-extends/app.vue
@@ -10,6 +10,7 @@ const bar = getBar()
     <pre>{{ JSON.stringify(themeConfig, null, 2) }}</pre>
     <BaseButton>Base Button</BaseButton>
     <FancyButton>Fancy Button</FancyButton>
+    <UIButton>UI Button</UIButton>
     <br>
     {{ foo }} {{ bar }}
     <br>
diff --git a/examples/config-extends/nuxt.config.ts b/examples/config-extends/nuxt.config.ts
index a08add69b9..27351ed2a6 100644
--- a/examples/config-extends/nuxt.config.ts
+++ b/examples/config-extends/nuxt.config.ts
@@ -1,7 +1,10 @@
 import { defineNuxtConfig } from 'nuxt3'
 
 export default defineNuxtConfig({
-  extends: './base',
+  extends: [
+    './ui',
+    './base'
+  ],
   publicRuntimeConfig: {
     theme: {
       primaryColor: 'user_primary'
diff --git a/examples/config-extends/ui/components/Button.vue b/examples/config-extends/ui/components/Button.vue
new file mode 100644
index 0000000000..8508b7cd00
--- /dev/null
+++ b/examples/config-extends/ui/components/Button.vue
@@ -0,0 +1,14 @@
+<script setup>
+defineProps({
+  color: {
+    type: String,
+    default: 'black'
+  }
+})
+</script>
+
+<template>
+  <button class="ui-button" :style="{ color }">
+    <slot />
+  </button>
+</template>
diff --git a/examples/config-extends/ui/nuxt.config.ts b/examples/config-extends/ui/nuxt.config.ts
new file mode 100644
index 0000000000..06d8bba06b
--- /dev/null
+++ b/examples/config-extends/ui/nuxt.config.ts
@@ -0,0 +1,7 @@
+import { defineNuxtConfig } from 'nuxt3'
+
+export default defineNuxtConfig({
+  components: [
+    { path: './components', prefix: 'UI' }
+  ]
+})
diff --git a/packages/bridge/src/module.ts b/packages/bridge/src/module.ts
index a3e74a7052..01470a74ff 100644
--- a/packages/bridge/src/module.ts
+++ b/packages/bridge/src/module.ts
@@ -41,8 +41,12 @@ export default defineNuxtModule({
       nuxtCtx.set(nuxt)
     }
 
-    // Mock _extends
-    nuxt.options._extends = nuxt.options._extends || []
+    // Mock _layers
+    nuxt.options._layers = nuxt.options._layers || [{
+      config: nuxt.options,
+      cwd: nuxt.options.rootDir,
+      configFile: nuxt.options._nuxtConfigFile
+    }]
 
     if (opts.nitro) {
       await setupNitroBridge()
diff --git a/packages/kit/package.json b/packages/kit/package.json
index 7e46ec8850..17750c39de 100644
--- a/packages/kit/package.json
+++ b/packages/kit/package.json
@@ -14,7 +14,7 @@
   },
   "dependencies": {
     "@nuxt/schema": "^3.0.0",
-    "c12": "^0.1.4",
+    "c12": "^0.2.0",
     "consola": "^2.15.3",
     "defu": "^5.0.1",
     "globby": "^13.1.1",
diff --git a/packages/kit/src/loader/config.ts b/packages/kit/src/loader/config.ts
index 909e30d4e3..a783b7465a 100644
--- a/packages/kit/src/loader/config.ts
+++ b/packages/kit/src/loader/config.ts
@@ -44,7 +44,7 @@ export async function loadNuxtConfig (opts: LoadNuxtConfigOptions): Promise<Nuxt
     layer.config.srcDir = resolve(layer.config.rootDir, layer.config.srcDir)
   }
 
-  nuxtConfig._extends = layers
+  nuxtConfig._layers = layers.filter(layer => layer.configFile && !layer.configFile.endsWith('.nuxtrc'))
 
   // Resolve and apply defaults
   return applyDefaults(NuxtConfigSchema, nuxtConfig) as NuxtOptions
diff --git a/packages/nitro/src/build.ts b/packages/nitro/src/build.ts
index 343a6c658f..4db4b99080 100644
--- a/packages/nitro/src/build.ts
+++ b/packages/nitro/src/build.ts
@@ -93,10 +93,7 @@ export async function writeTypes (nitroContext: NitroContext) {
 }
 
 async function _build (nitroContext: NitroContext) {
-  const serverDirs = [
-    ...nitroContext._extends.map(layer => layer.serverDir),
-    nitroContext._nuxt.serverDir
-  ]
+  const serverDirs = nitroContext._layers.map(layer => layer.serverDir)
 
   nitroContext.scannedMiddleware = (
     await Promise.all(serverDirs.map(async dir => await scanMiddleware(dir)))
@@ -181,7 +178,7 @@ async function _watch (nitroContext: NitroContext) {
   let watcher = startRollupWatcher(nitroContext)
 
   const serverDirs = [
-    ...nitroContext._extends.map(layer => layer.serverDir),
+    ...nitroContext._layers.map(layer => layer.serverDir),
     nitroContext._nuxt.serverDir
   ]
 
diff --git a/packages/nitro/src/context.ts b/packages/nitro/src/context.ts
index ea8b7da227..ddb5bc9e46 100644
--- a/packages/nitro/src/context.ts
+++ b/packages/nitro/src/context.ts
@@ -84,7 +84,7 @@ export interface NitroContext {
     runtimeDir: string
     hooks: Hookable<NitroHooks>
   },
-  _extends: Array<{
+  _layers: Array<{
     serverDir: string
   }>
 }
@@ -158,7 +158,7 @@ export function getNitroContext (nuxtOptions: NuxtOptions, input: NitroInput): N
       runtimeDir,
       hooks: createHooks<NitroHooks>()
     },
-    _extends: nuxtOptions._extends.map(layer => ({
+    _layers: nuxtOptions._layers.map(layer => ({
       serverDir: resolve(layer.config.srcDir, (layer.config.dir as any)?.server || 'server')
     }))
   }
diff --git a/packages/nuxt3/src/auto-imports/module.ts b/packages/nuxt3/src/auto-imports/module.ts
index b580bba570..ab2e9d2c83 100644
--- a/packages/nuxt3/src/auto-imports/module.ts
+++ b/packages/nuxt3/src/auto-imports/module.ts
@@ -40,14 +40,9 @@ export default defineNuxtModule<Partial<AutoImportsOptions>>({
       imports: options.imports
     })
 
-    // composables/ dirs
-    let composablesDirs = [
-      join(nuxt.options.srcDir, 'composables'),
-      ...options.dirs
-    ]
-
-    // Extend with layers
-    for (const layer of nuxt.options._extends) {
+    // composables/ dirs from all layers
+    let composablesDirs = []
+    for (const layer of nuxt.options._layers) {
       composablesDirs.push(resolve(layer.config.srcDir, 'composables'))
       for (const dir of (layer.config.autoImports?.dirs ?? [])) {
         composablesDirs.push(resolve(layer.config.srcDir, dir))
diff --git a/packages/nuxt3/src/components/module.ts b/packages/nuxt3/src/components/module.ts
index 7a01452cee..99d3d358ec 100644
--- a/packages/nuxt3/src/components/module.ts
+++ b/packages/nuxt3/src/components/module.ts
@@ -39,26 +39,25 @@ export default defineNuxtModule<ComponentsOptions>({
           }))
         }
       }
-      if (dir && typeof dir === 'object') {
-        return {
-          ...dir,
-          path: resolve(cwd, resolveAlias(dir.path, {
-            ...nuxt.options.alias,
-            '~': cwd
-          }))
-        }
+      if (!dir) {
+        return []
       }
-      return []
+      const dirs = (dir.dirs || [dir]).filter(_dir => _dir.path)
+      return dirs.map(_dir => ({
+        ..._dir,
+        path: resolve(cwd, resolveAlias(_dir.path, {
+          ...nuxt.options.alias,
+          '~': cwd
+        }))
+      }))
     }
 
     // Resolve dirs
     nuxt.hook('app:resolve', async () => {
-      const allDirs = [
-        ...normalizeDirs(componentOptions.dirs, nuxt.options.srcDir),
-        ...nuxt.options._extends
-          .map(layer => normalizeDirs(layer.config.components, layer.cwd))
-          .flat()
-      ]
+      // components/ dirs from all layers
+      const allDirs = nuxt.options._layers
+        .map(layer => normalizeDirs(layer.config.components, layer.cwd))
+        .flat()
 
       await nuxt.callHook('components:dirs', allDirs)
 
diff --git a/packages/nuxt3/src/core/app.ts b/packages/nuxt3/src/core/app.ts
index 7726229f59..3d878a8df9 100644
--- a/packages/nuxt3/src/core/app.ts
+++ b/packages/nuxt3/src/core/app.ts
@@ -71,9 +71,9 @@ export async function resolveApp (nuxt: Nuxt, app: NuxtApp) {
     app.errorComponent = (await findPath(['~/error'])) || resolve(nuxt.options.appDir, 'components/nuxt-error-page.vue')
   }
 
-  // Resolve layouts
+  // Resolve layouts/ from all config layers
   app.layouts = {}
-  for (const config of [nuxt.options, ...nuxt.options._extends.map(layer => layer.config)]) {
+  for (const config of nuxt.options._layers.map(layer => layer.config)) {
     const layoutFiles = await resolveFiles(config.srcDir, `${config.dir?.layouts || 'layouts'}/*{${nuxt.options.extensions.join(',')}}`)
     for (const file of layoutFiles) {
       const name = getNameFromPath(file)
@@ -82,16 +82,19 @@ export async function resolveApp (nuxt: Nuxt, app: NuxtApp) {
   }
 
   // Resolve plugins
-  app.plugins = []
-  for (const config of [...nuxt.options._extends.map(layer => layer.config), nuxt.options]) {
+  app.plugins = [
+    ...nuxt.options.plugins.map(normalizePlugin)
+  ]
+  for (const config of nuxt.options._layers.map(layer => layer.config)) {
     app.plugins.push(...[
-      ...config.plugins ?? [],
+      ...(config.plugins || []),
       ...await resolveFiles(config.srcDir, [
         'plugins/*.{ts,js,mjs,cjs,mts,cts}',
         'plugins/*/index.*{ts,js,mjs,cjs,mts,cts}'
       ])
     ].map(plugin => normalizePlugin(plugin as NuxtPlugin)))
   }
+  app.plugins = uniqueBy(app.plugins, 'src')
 
   // Extend app
   await nuxt.callHook('app:resolve', app)
@@ -100,3 +103,15 @@ export async function resolveApp (nuxt: Nuxt, app: NuxtApp) {
 function getNameFromPath (path: string) {
   return kebabCase(basename(path).replace(extname(path), '')).replace(/["']/g, '')
 }
+
+function uniqueBy (arr: any[], uniqueKey: string) {
+  const seen = new Set<string>()
+  const res = []
+  for (const i of arr) {
+    const key = i[uniqueKey]
+    if (seen.has(key)) { continue }
+    res.push(i)
+    seen.add(key)
+  }
+  return res
+}
diff --git a/packages/nuxt3/src/core/nitro-legacy.ts b/packages/nuxt3/src/core/nitro-legacy.ts
index ca00a10424..3f5233cc0b 100644
--- a/packages/nuxt3/src/core/nitro-legacy.ts
+++ b/packages/nuxt3/src/core/nitro-legacy.ts
@@ -77,10 +77,7 @@ export function initNitro (nuxt: Nuxt) {
   })
 
   nuxt.hook('build:before', async () => {
-    const serverDirs = [
-      ...nitroDevContext._extends.map(layer => layer.serverDir),
-      nitroDevContext._nuxt.serverDir
-    ]
+    const serverDirs = nitroDevContext._layers.map(layer => layer.serverDir)
 
     nitroDevContext.scannedMiddleware = (
       await Promise.all(serverDirs.map(async dir => await scanMiddleware(dir)))
diff --git a/packages/schema/package.json b/packages/schema/package.json
index cd2cd5139a..500ac8b498 100644
--- a/packages/schema/package.json
+++ b/packages/schema/package.json
@@ -19,7 +19,7 @@
     "unbuild": "latest"
   },
   "dependencies": {
-    "c12": "^0.1.4",
+    "c12": "^0.2.0",
     "create-require": "^1.1.1",
     "defu": "^5.0.1",
     "jiti": "^1.13.0",
diff --git a/packages/schema/src/types/config.ts b/packages/schema/src/types/config.ts
index ac8765132c..85f0528729 100644
--- a/packages/schema/src/types/config.ts
+++ b/packages/schema/src/types/config.ts
@@ -10,7 +10,7 @@ export interface NuxtConfig extends DeepPartial<ConfigSchema> {
 
 /** Normalized Nuxt options available as `nuxt.options.*` */
 export interface NuxtOptions extends ConfigSchema {
-  _extends: ResolvedConfig<NuxtConfig>[]
+  _layers: ResolvedConfig<NuxtConfig>[]
 }
 
 export interface PublicRuntimeConfig extends Record<string, any> { }
diff --git a/yarn.lock b/yarn.lock
index f60fa4eea9..a72645de19 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -2914,7 +2914,7 @@ __metadata:
     "@nuxt/schema": ^3.0.0
     "@types/lodash.template": ^4
     "@types/semver": ^7
-    c12: ^0.1.4
+    c12: ^0.2.0
     consola: ^2.15.3
     defu: ^5.0.1
     globby: ^13.1.1
@@ -3084,7 +3084,7 @@ __metadata:
   dependencies:
     "@types/lodash.template": ^4
     "@types/semver": ^7
-    c12: ^0.1.4
+    c12: ^0.2.0
     create-require: ^1.1.1
     defu: ^5.0.1
     jiti: ^1.13.0
@@ -7061,6 +7061,21 @@ __metadata:
   languageName: node
   linkType: hard
 
+"c12@npm:^0.2.0":
+  version: 0.2.0
+  resolution: "c12@npm:0.2.0"
+  dependencies:
+    defu: ^5.0.1
+    dotenv: ^14.3.2
+    gittar: ^0.1.1
+    jiti: ^1.12.14
+    mlly: ^0.4.1
+    pathe: ^0.2.0
+    rc9: ^1.2.0
+  checksum: 1f69ed861368c8dc057f235a4925c4863b0423683a98578d3fa3c208dbcb43aadb907a5c855bf95969157210f632bfeb2bdf539f15a6c2d731d68f20273c00df
+  languageName: node
+  linkType: hard
+
 "cac@npm:^6.7.12":
   version: 6.7.12
   resolution: "cac@npm:6.7.12"