> This really smells fishy, because a browser extension bypasses any browser security one may have, and has access to one's entire computer.
IIRC that one is no longer true since the advent of sandboxing (and the end of native-code extensions via NPAPI and friends), all permissions have to be granted by the user explicitly.
> What valid reasoning could there be to justify a browser extension for this purpose?
Given the permissions it asks for (access catalyzex.com, arxiv, google scholar, twitter and google) and the description, I'd guess that whenever you search for some research paper it will forward the search to catalyzex and annotate search results.
Unfortunately, the access to Google and Twitter can also be used to exfiltrate your credentials or to commit actions on your behalf there, so I'd be very careful. Too bad the Chrome extension store (unlike the Firefox extension store) does not allow you to directly download the extension to examine it, or to prevent automatic updates.