The classic Mac OS (Toolbox) menu routine took over exclusive use of the machine when it was tracking the mouse in the menu - all multitasking stopped running.
So an extension could draw whatever fancy effect it wanted when the menu was down without worrying about a background application drawing over it (drawing over the transparency) as long you made sure to restore what was beneath when the menu was let go.
There were extensions that got around this, though. iTunes for the classic Mac OS (and I'm pretty sure SoundJam before it) could continue to play music with a menu open, for example.
Yeah you could do things like set timer interrupts, and starting in somewhere like MacOS 8.6 there was an actual multitasking (and multi-CPU) nanokernel running beneath everything that allowed you to schedule tasks in a more modern way.
But those tended to have some pretty gnarly limitations (like I think in interrupts you can't allocate memory) so AFAIK they were only used for stuff like real-time audio, I dunno if anyone ever used those to do screen drawing, so in practice I can't think of anything that would interfere with menu drawing.
So an extension could draw whatever fancy effect it wanted when the menu was down without worrying about a background application drawing over it (drawing over the transparency) as long you made sure to restore what was beneath when the menu was let go.