Sideloadong is automatic installation of extensions by 3rd party software. You can still install extensions manually using the extension package file and opening it with firefox. What you cant do is automate this.

Sideloading generally means just not using an official store so this seems to be poorly communicated.

Wait what? Sideloading means installing software directly, rather than from a first party distribution mechanism. If a user installs software manually they are still sideloading it, that's what the word means!!

Yeah, they just used a terrible internal name for the feature they are removing, that makes it sound way more severe than it actually is.

Seems somewhat tone-deaf with one of the big criticisms of the project being their restrictiveness regarding add-ons.

I haven't touched extension development for a while but afaik you could just open the extension package with the browser to trigger the installation process.

The side-loading they are talking about here seems to have the goal to avoid the search-bar crazyness thru adding extensions without user acknowledgement.

I guess you will still be able to do "Add-Ons" -> "Extensions" -> [Gear icon] -> "Install Add-On From File"