With about:addons + Install Add-On from File, they need to select the .xpi file. Which means you’ll have to use
web-ext build to build the .xpi file, and host it. (Usually it’s hosted on AMO, but you can also host it on GitHub releases. I can show you how I do this for Containers)
The Add-on still has to be signed. You can use
web-ext sign command to do that for each release. https://developer.mozilla.org/en-US/Add-ons/WebExtensions/web-ext_command_reference#web-ext_sign but you’ll need API access as an author/maintainer of the add-on on AMO, which takes a while to get the add-on through review.
You can build an un-signed .xpi file with
web-ext build. (In fact
web-ext sign does this first, then POSTs the un-signed .xpi to AMO for signing.) You can publish the un-signed .xpi file wherever you want, but it will only work on Aurora, Nightly, or un-branded builds of Firefox with
xpinstall.signatures.required set to
about:config.When AMO signs the add-on, yes - it essentially verifies that the .xpi was submitted thru the AMO process by an authorized developer of the add-on.