Thank you for the explanation! That makes sense now.

I'm still confused about what level of access is given to the extension and what using the extension means. Clicking on the extension asks for access to the current website, so I'm assuming that without giving access there or clicking "Always Allow on Every Website..." in the Safari settings, the extension does not have access to the web page contents.

Basic filtering claims to not require permission to read the web page data. But the extension is still used and does content filtering right?

Maybe this is more of a comment on Safaris weird terminology in the permission settings.

Yes, Basic can still block the connection requests without any permissions.