The extension only adds/removes the custom effect in the combat tracker, the rules for custom effects are the same as they have always been in FGU. The doc for those is here. As far as the actual custom effect window in FGU - yes, if you disable the eye icon it is only visible to the GM and not the players.
If already in combat tracker effects can be made visible or not to players by the button on the left when you expand out the combat tracker entry on the host.

