I copied the Daikin Binding into addon directory /opt/openhab2/addons.
I cannot see it for selection in PaperGUI Exetensions Bindings.
What am I doing wrong
You will never see it in PaperUI. Only addons that are officially part of the OH 2 distro can be installed and configured through PaperUI.
Assuming you followed the instructions here and/or here, once you put it in addons and configure it through openhab.cfg it is installed and you should be seeing some log statements at least when OH starts from the binding.