Here's what ended up working, via: http://discussions.apple.com/thread.jspa?threadID=2725432&tstart=0
The following are the basic steps to configure a "dynamic" WDS with the 802.11n AirPort Express Base Station (AXn) being extended by the 802.11n AirPort Extreme Base Station (AEBSn). Please compare them to what you attempted to see if anything was missed.
One thing to note is that the AXn is not capable of providing simultaneous dual-band operation like the AEBSn. That said, you will only be able to extend the 2.4 OR the 5 GHz radio of the AXn. Since the lower frequency band travels longer distances, I would suggest extending it.
o If practical, place the base stations in near proximity to each other during the setup phase. Once done, move them to their desired locations.
o Open AirPort Utility and select the AXn.
o Choose Manual Setup from the Base Station menu. Enter the base station password if necessary.
o Click AirPort in the toolbar, and then, click Wireless.
o Choose “Create a wireless network” from the Wireless Mode pop-up menu, and then, select the “Allow this network to be extended” checkbox.
o Next, select the AEBSn, and then, choose Manual Setup from the Base Station menu. Again, enter the base station password if necessary.
o Choose “Extend a wireless network” from the Wireless Mode pop-up menu, and then, choose the network provided by the AXn from the Network Name pop-up menu.
o Enter the base station network and base station password is necessary.
o Click Update to update the base station with new network settings.
I recently encountered the same issue and was able to resolve it by removing the Wifi connection in System Preferences > Network.
Here you can select the Wi-Fi interface from the left panel and click the "-" underneath this panel. Then, add back the Wi-Fi interface by pressing the "+", select Wi-Fi and attempt to connect to your desired network.
This should then place all devices in the correct order by connecting to the device that creates the wireless network as opposed to those devices that either join or extend it.
Best of luck.
Best Answer
The advantage is you can locate the airport potentially closer to you than the modem. The disadvantage is you need to set it up and perhaps string an ethernet if you wish to avoid delays of wirelessly extending a network.
If I could, I would always run an ethernet cable (gigabit if possible, but 100 is usually faster than any WiFi consumers use in practice) from the router to all base stations.
That allows you to choose different channels and devote 100% of the wireless bandwidth to serving clients as opposed to backhauling traffic to the router.