How is defederating going to help here? I'm genuinely asking. Doesn't that just stop their content from showing on our feeds? It shouldn't affect the amount of user data they can collect which isn't much anyways because we're not using their proprietary software.

My understanding is that people on exploding heads for example can still read these comments too. They just can't reply. Or they can but we don't see their replies. Only the people that federate with them do.

Am I getting something wrong here?

You're absolutely right!

Meta is a threat to the privacy of fediverse users, if there are fediverse instances that remain federated with Meta.

Ross Schulman, senior fellow for decentralization at digital rights nonprofit the Electronic Frontier Foundation, notes that if Threads emerges as a massive player in the fediverse, there could be concerns about what he calls “social graph slurping." Meta will know who all of its users interact with and follow within Threads, and it will also be able to see who its users follow in the broader fediverse. And if Threads builds up anywhere near the reach of other Meta platforms, just this little slice of life would give the company a fairly expansive view of interactions beyond its borders.

https://www.wired.com/story/meta-threads-privacy-decentralization/