Tag Toolbar v1.x are for Thunderbird 68. For Thunderbird 78, install v2.x. From v2.0.0 tags are not displayed on toolbar due to the limitation of MailExtensions. Tags are shown in popup of the toolbar button. So, Tag Toolbar is renamed to Tag Popup. You can also toggle tags by clicking a tag label in the message header view in v2.x series.
For details of Tag Popup functionalities, please check the following blog post:https://hogiblog.blogspot.com/2020/04/mailextensions-add-ons.html