More like overrated. An extension can't be better, can't offer more than what the host application allows. All these developers hang on by a thread. Compared to OS APIs, in-app APIs are more unstable. Goals, profit incentives affect a single application much harsher than how a wider ecosystem would react. It's good that they exist, but at most they are viewed as a necessary annoyance by their hosts. Chrome I won't even need to mention, but winds could turn anytime on something like VSCode as well.

Sure, Webkit and VSCode are both open source and forkable along with their extension support, but any later development would rot compatibility until, and if, a popular fork emerges.