When exactly does navigator.clipboard.readText() prompt for user permission in Chrome?

Consider the following HTML file:

<div contenteditable="true" id="editable"></div>

<script>
  const editable = document.getElementById('editable');
  editable.addEventListener('paste', () => {
    navigator.clipboard.readText().then(x => console.log(x));
  });
</script>

Consider the following two scenarios in Chrome browser only:

  1. I press Ctrl+V (or Cmd+V on macOS) to paste text into the textbox. In this case, I do not get any permission prompt, and the console.log works.
    Note that this appears to be contradictory to the MDN documentation which states:

    Reading requires the Permissions API clipboard-read permission be granted. Transient activation is not required.

  2. If I run document.execCommand('paste', false) from the content script of a Chrome extension which has both the "clipboardRead" and the "clipboardWrite" permissions, then I do get the permission prompt. It is not clear to me why execCommand has a different behavior compared to the scenario above. The prompt is shown in this image:

    permissions prompt

My question: could anyone explain the behavior in line with relevant documentation, spec or Chromium source code?