Firefox does support targeting specific domains, so the add-on specifically chose to apply to all domains by writing "https://*/*" in "permissions" in manifest.json. It probably asks for this permission because of custom domains, as you theorize.

I can see in the extension source (thanks to https://addons.mozilla.org/en-US/firefox/addon/crxviewer/) that on every page, the extension uses JavaScript to check for a top nav bar or a login nag popup and hide them if present, then applies CSS that hides five other UI elements if they are present.

I wonder if there could be uBlock/AdBlock filter made for medium in general to block all this. I dunno the format of filter files, but it was easy to add a uBlock rule for a particular element using UI.