Keep in mind that while Firefox offered 20 extensions on mobile, Chrome offered zero and continues to lack any support for extensions whatsoever. Nobody ditched Firefox for Chrome because of the extensions thing.
The move to WebExtensions was painful, but it also made it possible to easily port Chrome extensions to Firefox, which was a great boost for the extension ecosystem, as well as being the thing that actually made mobile extensions possible.
I do agree they should've made the transition period longer though. There were like two years in between where some of the big Chrome extensions hadn't been ported yet, but their original Firefox counterparts were already killed. That probably made a few users move ti Chrome, but that was already during the great Chrome migration, so I can't imagine this made a huge difference.
I think your comment points towards the heart of my complaint, namely, that Firefox stopped extensions on its tracks to offer parity with a browser that doesn't care about extensions. It fits the post's complaint about doing things just because Chrome is doing them.
As for the effect of extensions, my feeling is that people care less about them now but used to care more about them back then. I think Firefox main selling point was always "my cousin who works in IT told me to install this instead of that", and once Firefox angered those power users away (at the same time when Chrome was trying to bring them in) the effect compounded.
It's especially backwards because most extensions worked fine when they were first cut down to that list of 20.
They (the proclaimed bastion of user choice and freedom) just didn't allow you to install them. Forks and self-built versions handled extensions just fine immediately, there was no technical blocker, just managerial. For years. While constantly proclaiming that it was just a brief temporary state.
I switched to some of those forks immediately, literally every extension I used before worked perfectly. None of them were in the blessed list.
I honestly can't see it as anything but an intentional self-harm move, behind a bunch of smoke and mirrors.