Chrome Extensions as a business

I believe it works. It's a bit niche for sure but the marketplace helps. If I'm not mistaken Loom and Grammarly started mainly as an extension.

Chrome extensions allow for ease of use. If it's easier to use your app as a chrome extension - go for it. For example grammarly has both a chrome extension and dedicated editor.

I've seen some Chrome Extensions do really well on PH, especially if launched towards the end of the week, so I wouldn't let that deter you. Building an extension app, versus your own dedicated app has plenty of Pros and Cons. Naturally always being accessible whenever a user is browsing on their desktop and being able to leverage whatever the extension offers in context of what they are doing are huge pluses. The negatives are of course that you're limited to desktop (at least at this stage) and held to whatever limitations Chrome decides to enforce, which can cause scenarios where suddenly your core offering is no longer possible.

So I think it all comes down to what the intended use case for your product is. Is the product only useful for Chrome users, or is something that other people can benefit from. If it's something that exclusively solves a Chrome specific problem (e.g. it's some tool that reorganises your tabs), then of course, go where the only market for this type of a tool is. If it's something that is just generally useful - a password manager, a grammar checker, a weather forecast thing, whatever the thing is that doesn't specifically depend on being a part of Chrome, then no sense in limiting your potential customer base. These days Chrome makes up only about 65% of the marketshare, so focusing exclusively on it, you're rejecting more than 1/3 of your potential users outright.