Having an extinguisher is very good, but you need a larger one.
A 2 1/2lb extinguisher might be able to put out a few sheets of paper that are burning in a waste basket or a burning paint can with almost a guarantee of success, but in a person's hand who has little or no training in the proper use of a fire extinguisher it likely won't do much more than that. Most try to get too close to the fire before using the extinguisher. 5 ft away is about right for a very small fire, and you should aim at the base of the flames with a side to side sweeping action while moving closer slowly. A 2 1/2lb extinguisher will only last about 10 seconds.
In a woodworking shop you should have at least one 5 or 10lb dry chemical extinguisher plus additional extinguishers (2nd and third could be smaller) for each 25' X 25' size area if your shop if is larger than that. You should also realize that you likely will only have one shot at putting out a fire with a dry chemical extinguisher, because the chemical dust cloud will make it nearly impossible to go back and do it again with a second extinguisher. Inhaling that stuff is not good for you. My 14 X 26' shop never goes below freezing, so in addition to my 10 lb dry chemical extinguisher, I also keep a pressurized water extinguisher handy for the non-electrical and non solvent fires. It makes much less mess. There is also a 25' hose with a nozzle on a hanger just outside the door that is always connected to water. It may be frozen in the coldest part of the winter, but it's there and ready most of the year.
I keep my extinguishers near the door, so I can either choose to flee or turn and go back with an extinguisher to fight the fire. Also, if the first extinguisher doesn't do it, be sure to call the fire department before you go back in with the next one. Many people will keep trying to fight the fire and it gets totally out of control before their neighbor notices and calls the fire department for them.
Then it takes another 5 or more minutes for the fire department to get there and by then the whole shop is burning. These same rules should be applied to how you fight a fire anywhere, be it in your house, your shop, car or truck, or anywhere.
A fire rarely happens, but you need to be properly prepared, just in case. Also realize that you will likely have only one chance to put out the fire, and you will not succeed if you don't have a large enough extinguisher to do the job, or have some back-up capability.
Charley
(retired fire marshal)