I've updated the extension's page to add more detail on what exactly it does. Does this help clarify what its functionality is, or does it still appear to not do anything?

Essentially, Tumblr adds posts to your dashboard from blogs you do not follow, saying things along the lines of "Here's a blog:". This extension removes those recommended posts, leaving only posts from blogs you follow. Do you still get posts from blogs you do not follow with it installed?