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LG smart TVs caught logging audio with screen off and snooping on local devices
(www.notebookcheck.net)
This is a most excellent place for technology news and articles.
Yes, it will do that. I wouldn't call it an extension. Pihole is a DNS server. It's the "phonebook" that your devices will use to look up IP addresses that correspond with the requested domains. If a domain is requested and it happens to be on the block list, it will deny the lookup.
Adguard offers a similar service that isn't self hosted (Which I use as backup) and they have a pretty good explanation here: https://adguard-dns.io/en/welcome.html#workStages