As its most basic function, @herotag.elrond allows associating complex pieces of information, such as a wallet address, to a human-readable name. This means that instead of sending money to erd1hmlnypa0c9x7canxgdsue86ckla0zekv0258f2q40ady50v8yxc92y5k2y you can just send it to @alicejohnson.elrond
The .elrond extension is added automatically at registration by Maiar. In this phase when searching for @herotag it does not matter if you add or not .elrond.
In the future, once more extensions are used, you will need to make sure you add the extension in order to search, send or receive a herotag.
Note: Crypto transactions take place on public blockchains. Your @herotag is public and advanced users can look up your address on the blockchain and view your transactions history. Turning visibility OFF (from Profile Info screen) will make your herotag private only inside Maiar app, but not on the blockchain.