Why was I not requested to set up a password for Extended?

Your Extended account is completely separate from your notes account. Extended uses an email based authentication system. When you want to sign in, simply visit dashboard.standardnotes.org and enter your email in the right-hand column. You will receive a login link directly to your email.

We designed it this way to keep a separation of concerns between the "business" and the "product", and also to make sure you don't accidentally use your notes password for your Extended account.