As per my understanding and the sly documentation at [1], @extension will add the extension to the path. So, this is working as expected.
URL manipulation
Adds the html extension to a path.
<a href="${item.path @ extension = 'html'}">${item.name}</a>
Adds the html extension and a selector to a path.
<a href="${item.path @ extension = 'html', selectors='products'}">${item.name}</a>
I tried the following on my side:
${'https://www.google.com/resources' @ extension='html'}
The output is below:

[1] HTL Block Statements