Select text, press a named category, and it is highlighted in that category's colour — ordinary Google Docs highlighting, with a legend. The panel counts the passages in each category, and Extract passages writes them, grouped, at the end of your document. Pro marks every match of a word or phrase at once, saves your own palette across documents, and shows how much of the document each category covers.
One permission, nothing else. Nothing from your file is ever sent anywhere: there is no database and no analytics. Without a licence key the add-on makes no network request at all; with a Pro licence it asks our licence server once a day whether that key is still active, sending only the key and a random identifier for the installation. Your highlights are part of your document and survive without the add-on.