Is it okay to create frames within web pages?

Does the current web extension allow frames to be inserted to a certain page?

I want to create an addon which inserts a frame to other content depending on the current URL, or iframes which I believe are the current standard.

Is it permissible?

Yep, it’s possible.
Although some pages CSP will prevent loading 3rd party iframe.
But there is workaround - you can load your extension page inside the iframe first and then inside your extension HTML load an iframe with the target page. That should work on every page with any target page (as long as you have host permission and the target page allows to be loaded in a iframe).

Thanks. Do you have some links to examples I can use as a starting point?

Not exactly links, but I can give you a picture from my “Web translate” addon that does this when translating text in a page: