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How does it work? When you apply the extension to a 5E campaign you'll notice a new field on items, npcs and character sheets (under Abilities tab) called "Effect Features".
For items, when you add an effect such as "IFT: ALIGN (evil); AC: 2;" it will be placed on the owner of the item if they equipped the item and are in the combat tracker.
You will also notice the same type of entry for NPCs. It works similar to the above except when you drag/drop the NPC into the combat tracker these effects will be added automatically.
You will also notice the same type of entry for Player characters, under the "Abilities" tab in a section called "Advanced Effects". It works similar to the above except when you drag/drop the PC into the combat tracker these effects will be added automatically.
These effects will be applied to N/PCs when they are placed into the combat tracker automatically. Items worn on PCs will have their effects applied automatically. You can even have effects on items that only work for that item when it's used in combat.
You can find extensive details on the use of the extension on the FG forums here: