A thai acquaintance told my wife she has been living in germany for a year and has just come back to renew her visa for another year. Is this possible with german visas? I thought (and happy to be corrected) you could only get a 90 day visa.

depends how long she has been doing it.

if she has already a lot of visits under her belt, shengen visa can be issued for 6 months, 12 months.

Sounds like somebody is mistaking either residence permits/cards and visas or the validity period with the duration you can stay.

Schengen visas are issued for max 90 days, however they may issue multiple entry visa (MEV), which can be valid for 1-5 years. However the maximum duration is still 90 days within 180 days.

Then there are residence permits, which ofcourse are for longer, indefinite or permanent stays.

So if this person has been living in Germany, it must be a residence permit. Or somebody is going to be in a lot of trouble if they mistook a 1 year MEV for a 1 year stay visa!

Some countries have treaties dating from pre-Schengen for short stays (Aussies with France for instance?) which allows them to stay an additional number of (90 in this case) days in only these particular member state(s) after the Schengen duration of 90 days has been reached.