Why does substring slicing with index out of range work?
Why doesn't 'example'[999:9999] result in error? Since 'example'[9] does, what is the motivation behind it?
From this behavior I can assume that 'example'[3] is, essentially/internally, not the same as 'example'[3:4], even though both result in the same 'm' string.
Answer
You're correct! 'example'[3:4] and 'example'[3] are fundamentally different, and slicing outside the bounds of a sequence (at least for built-ins) doesn't cause an error.
It might be surprising at first, but it makes sense when you think about it. Indexing returns a single item, but slicing returns a subsequence of items. So when you try to index a nonexistent value, there's nothing to return. But when you slice a sequence outside of bounds, you can still return an empty sequence.
Part of what's confusing here is that strings behave a little differently from lists. Look what happens when you do the same thing to a list:
>>> [0, 1, 2, 3, 4, 5][3]
3
>>> [0, 1, 2, 3, 4, 5][3:4]
[3]
Here the difference is obvious. In the case of strings, the results appear to be identical because in Python, there's no such thing as an individual character outside of a string. A single character is just a 1-character string.
(For the exact semantics of slicing outside the range of a sequence, see mgilson's answer.)