What kind of signature this is
This produces what the law in most jurisdictions calls a simple or basic electronic signature: a mark you applied to a document with the intent to sign it. In the United States (ESIGN and UETA), the United Kingdom and EU (eIDAS), Canada (PIPEDA) and Australia (the Electronic Transactions Act), electronic signatures of this kind are generally admissible and generally enforceable for ordinary commercial agreements. That is genuinely most of what people sign.
It is not a digital signature in the cryptographic sense. There is no certificate, no key, and nothing that proves who applied the mark or that the document has not changed since. A qualified or advanced electronic signature — the kind that binds an identity to the document cryptographically — is a different mechanism with a different purpose, and where one is required, an image of a signature will not do.
Some categories commonly need more: wills, some property transfers, certain court filings, and anything a specific statute or a counterparty's policy says must be witnessed or notarised. If a document matters and you are unsure which category it is in, that is a question for a lawyer rather than for a tool page — this is not legal advice.
Making a signature that does not look pasted on
If you are photographing one, sign in black ink on plain white paper, photograph it in even daylight without a shadow across it, and crop close. The tool removes the white background so what lands on the page is the stroke rather than a white rectangle sitting on top of the document.
Size it against the surrounding text rather than against the signature line, which is often longer than any real signature. Slightly overlapping the line looks natural; hovering well above it does not. And a signature that is the same crisp black as the body text can look printed — a very slightly softer mark reads as a signature.
If the document is a form rather than a contract
A signature is one kind of mark; ticking boxes and filling fields is another. Annotate PDF handles the rest of a form — text, checks, highlights and notes — and works on scans as well as on text-layer documents, because it draws on top of the page rather than editing the text underneath it.
Why the file never leaves your device
Every step happens in the browser tab: the PDF is parsed in memory, the signature is drawn to a canvas, the mark is embedded into the page, and the result is saved as a download. Nothing is uploaded, so no copy of your signature image and no copy of the agreement exists anywhere but on your machine. Given that a signature image is reusable by anyone who has it, that is not a small property.