I read the link but did not find any explanation of how the extension checks your login/password against the 4 billion known compromised credentials, without exposing your login/password to a third party.
It's part of the under the hood image which gave a brief explanation
What under the hood image?
Probably using a bloom filter
I wonder what this will mean for Have I Been Pwned. This is essentially the same service, but with the behemoth of google behind it.