The Master Key in the extension is separate credential.
Totally non-custodial - we can't see it nor back it up, it stays on your machine and is not sent to any server. It can be used for signing Nostr events (ie. using Nostr in browser) but also for LNurl auth (login with Lightning), BTC on-chain transactions and Liquid - but those features are in built, and perhaps there is more to come.