Doesn’t do anything
Edit because of developer response. I would say not clearly because I have no pop over like you have in your screenshot, and am on an iPhone so there is no keyboard that pops up when watching a video. Looking at the permissions it has the YouTube sites listed as ask, but I have not been asked to allow the extension on any of them. I stand by my review that this extension doesn’t work, or if it does and I’m doing something wrong then the documentation needs work.
Second edit: I played around with this some more and finally got it working. I had to go in and change ask to allow on all the sites because it did not ask me for permissions. Once I did that, the extension icon showed up in the address bar and I was able to use the extension. For someone who had never used a safari extension and barely uses safari on an iPhone before this was a bit of a struggle to figure out. For example I had no idea you could hit the Aa icon and open up all of safaris settings, including extensions. I will update my review to 3 stars, will make it 5 stars when the documentation issues get resolved.
Response from developer
There are no options on YouTube itself. It says very clearly in screenshots and instructions how to interact with the extension. You can either add the button to the menu bar and use that or use the keyboard shortcuts