"Keep an eye out for Web Push on iOS and iPadOS in 2023."
https://webkit.org/blog/12945/meet-web-push/
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The "Window is occluded" message I saw in the Console, led me to close any apps that use overlays on screen, such as software brightness apps (QuickShade, Nocturnal), night mode type apps (Flux, Nocturnal), rounded corner adder apps (Displaperture).
Quitting / killing those apps (or not starting them) had resolved the issue for me, and allowed me to enable Safari Extensions again.
Under Catalina, I'm seeing this message in my Console when I try to enable an extension:
default 13:15:51.894123+0200 Safari Window is occluded, cannot enable extensions