CBoz
We Are NXT!
It's a way for her to control how much pressure she puts on the elbow joint without actually hurting her opponent. Very much a work a la Brock Lesnar's kimura "arm breaks;" the arm isn't even extended in that picture.
Now, I've seen people use armbar variations as counters, that will look something like that, but with the arm properly extended (so you extend the arm, put it on the hip facing away from the torso, wrap your arm on that same side under your opponent's extended arm, and crank away). Those SUCK to be in, since the pressure will often be directly on the elbow joint. I've also seen omoplata variations that look vaguely like that picture, which also suck to be in. Bottom line, it looks ridiculous because the only way to perform an armbar variation like that and not hurt your opponent is to make it look ridiculous.
Or she could just use the regular armbar and bypass all of this. It's not as if wrestlers haven't been using worked versions of that for 6 or 7 decades.
It's not extended because that's how she does it, that's the extent of the hold. She literally hugs the arm, falls back and it bends at it's natural position, aka the elbow. There's no hyper-extension like a real arm bar.
