The developers take a carefully relaxed attitude to mods. They are indeed against the terms of service. That said, as long as you aren’t negatively affecting anyone else’s experience they won’t enforce.
The big one in the community is mods that show the relative performance of players in raiding groups- fancy DPS meters that compare your damage against their data, so you can see where how your performance compares to the average player using the mod. These are very widely used by players doing the most challenging raids, and are, again, very much against the ToS.
The devs have let it be known that the thing that will get you banned is not using the software, but talking about it, especially as a way to attack or criticize other players. Use mods to enhance your own experience, or as a way to improve your play, they’ll look the other way. DPS-willy waving contests? Take an enforced break from the game.