For the longest time, the OAuth extension was OAuth 1 only. Since OIDC requires OAuth 2, we implemented our custom OIDC-like authentication method instead. Now that we support OAuth 2, we should fix that; OIDC is a widely understood web standard while our custom fork isn't, and it probably doesn't take a lot of effort to support at least the core part of OIDC.
Note this is unrelated to MediaWiki-extensions-OpenID-Connect; that extension is for enabling third-party wikis to use an external OIDC provider as their log-in backend for MediaWiki ("operate a wiki where accounts are managed outside MediaWIki"). This task, on the other hand, is about enabling external services to use MediaWiki as their OIDC provider ("create a tool where you can login with your Wikipedia account"). The latter is possible today over OAUth 1.0, and this task is about support OAUth 2.0 with OIDC.
tl;dr of the comments: the OAuth extension implements a subset of the core OIDC spec's functionality; it's not technically compliant, but it might be compliant enough to work in practice, depending on which of the several possible workflows a client tries. Authlib, for example, works with Wikimedia wikis, without needing a custom MediaWiki plugin. Feedback on other OIDC clients' compatibility welcome.