why does running an extension in private mode still allow it to access my online activity
The article "Extensions in Private Browsing" has a section called "Enabling or disabling extensions in private windows". It shows that you can toggle whether the extension will be allowed/not allowed to be run in private windows. The part that's causing confusion to me, is why an extension running in private window can access my online activity. Does that not defeat the purpose of browsing in private mode? The article does not provide a clear explanation for this.
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PB mode means that no data is stored in the profile folder on the hard drive, but that all data is kept in memory until you close all PB mode windows or Exit Firefox. This has nothing to do with accessing session data like the browsing history in PB mode, so what you notice is expected behavior.