The short answer: hair should reach the occipital bone. It’s right between your ears and where your head and neck connect. (Check out the pictures of Katie Holmes for an idea.)
The scalp hair should be thick enough to conceal the extension attachments. Seeing the extension attachment points is not desirable. Short hairstyles such as the pixie cut often don’t have allow enough hair to cover the extensions.
Hair color differences are more stark with short hair, so be particular about the color. Make sure it matches!
You’ll probably want to avoid the mullet look. Without proper blending, the gap between the real hair and the extensions will be too drastic. If hair barely reaches the occipital bone, try intermediate length instead of going for an extremely long look. Otherwise, blending can be difficult.
Blending is so important, especially with short hair. Make sure to frame the face and connect the layers, so the extensions are not obvious and look as natural as possible.
To recap: Extensions can be installed in very short hair, but blending is crucial. Extensions also shouldn’t be installed in thin, short hair.
And remember, your clients hair will still grow while extensions are in!