“Edit with” is the preferred way. Apple introduced the extensions API before they added the “Edit with” menu, so that’s why the extension is around. But, it doesn’t work as nicely as the Edit with menu.
The Share menu can work as well, but it won’t replace the original.
Thanks for the clarification! I use Share menu to load in 3-5 photos, use elements of each for a composite, and save the composite somewhere else. So, works well for me.