

They want to intercept your searches and url entries to run them through the privacy preserving data extracting machine in order to collect data that will be sold to advertisers and used to pollute your search results and url suggestions with paid-for links. They were trying to be vague about it so that people would not understand this, and instead all they accomplished was to make people think they want to record everything you type into every web form. That’s my guess, anyway. Maybe they really do want everything.
It already exists at least as an “experiment” but I guess now it’s nearly ready for full production use. Perhaps the new terms of use text is motivated by not enough people accepting the old merino opt-in prompt as well as wanting to get more third-parties involved in the system. More details here: https://firefox-source-docs.mozilla.org/browser/urlbar/firefox-suggest-telemetry.html