Spectacle needs a Chrome Extension in order to Capture any Actions you would like to have included in your Videos.
Why does the extension require "Read and change all your data on all websites" permissions?
Spectacle was made to be able to Capture Actions and subsequently Record Videos on any website. This is why Spectacle needs this permission. The most important thing is that Spectacle will never record data while you're not using Spectacle. When you are using Spectacle and e.g. click "Capture actions", Spectacle will open your website after which it will Capture all the Actions you perform on the site and store those on your Video's Timeline. You will know when Spectacle is recording data because it will show the Spectacle Heads Up Display (HUD)
Why does the extension require "Detect your physical location" permissions?
Many websites display different content based on your location. E.g. Cookie banners will often show for EU visitors but not for US based visitors. In order to ensure your Videos show the correct content, Spectacle automatically detects your location so that an appropriate data center location can be picked to Record your Videos from.
Why does the extension require Incognito permissions?
Each time you visit a website, that website is most likely to store some things about you and/or your visit that might influence how the website looks or behaves the next time you visit. E.g. when you log in to a website and come back later, you're probably still logged in. Clicked away a cookie banner? Next time it won't be there anymore.
That's why in order to be able to run your Actions in a consistent, reproducible manner, Spectacle needs a clean slate when Capturing Actions as well as when Recording your Videos. This is exactly what an Incognito session does! That's why the Spectacle Chrome Extension needs Incognito permissions.