Think we extended him in the summer because of the decision to let Sterling and Jesus go. We'd be very light in terms of senior players on the wings if he'd gone too - Palmer looks ready but is inexperienced and had a lengthy injury last season, so it would have been a huge gamble to nail him on for a 20+ match season. As it is, we're using Bernardo to cover on the wing quite a lot, and I don't necessarily mind him playing there but it potentially leaves us short in the middle.
So keeping Mahrez was probably a pragmatic logistical decision. On top of that he did score a bunch of goals for us last season and that papered over some of the frustrations of watching him play - you'll take the odd missed penalty, or a selfish shot when a pass is on, or a slightly laissez-faire approach to tracking back, if he's one of the club's top scorers.
But if he's not scoring then the deficiencies in his play have nowhere to hide.
I think he's been good for us over the years, is going through a rough patch now, but may well turn it around and give us exactly what we need at some crucial point.
That said, I hope these 2 years of his contract are his last with us, and that they constitute a gradual passing of the reins to Palmer - when Mahrez's contract expires Palmer will be 22 and I want him as a genuine starting option.