I think plenty of folks just have a vague understanding of electrical codes and say stuff like that to impress others.

Generally speaking, you're just not supposed to do permanent electrical wiring with extension cords and power strips, especially not for stuff that goes into or through walls. This has nothing to do with plastic - you have plenty of plastic in electrical boxes, outlets, PVC conduit, etc. Cable insulation is plastic too.

The electrical code doesn't want you to put extension cords in the wall mostly to make sure that the connections can't come apart, that the comparatively softer and more delicate wires aren't easily crushed or abraded, and so on.

This project definitely isn't done the way you should do it if you had a real budget dedicated to it. Is it a death trap? Meh, I've seen far worse extension-cord contraptions in US homes.

Two things come to mind: 1) if any arcing occurs, a metal enclosure will shunt to ground and (hopefully) trip a breaker; 2) in the event of an overload, plastic melts which might result in a fire.