Twitch (and YouTube currently) switches to a new content stream to play an ad, which is easy to detect and block in an extension. If I understand the tech correctly, server side ads would be stitched into the playing content stream. The extension would have to know the content of the video to know that an ad is playing. There are some clever ways that might be caught (looking for spikes in bitrate, volume differences, etc), but none of that currently exists in the software in the OP.