2. Allows you to add your identity handles that you own. So you can specify multiple twitter/reddit/facebook/HN/... accounts that you own
3. Link communities with your identities. So you can share your reddit handle by joining a community.
4. Highlight a community member while browsing the site. So if you are browsing hacker news and have added yourselves to the community listing, you can see other discussions highlighted from other members.
The entire extension lives in browser space and localstorage. The backend just maintains a mapping of community id to profile IDs, which is synced once in a while. A community code might be required to add yourselves to the community.
This is like Reddit flairs, but flairs only work on a single subreddit, this is intended to work across various discussion forums.