Editing a shared Google Docs document is inherently creating derivative works. You and anyone editing with you are asking Google to change the original document via HTTP requests. Each edit is a derivative work of the original document you uploaded to Google Docs, so of course Google needs to be allowed to do this as part of its license to use your data.

Yep. Thumbnails, PDFs, showing excerpts when you search for a document, etc. could all probably be argued to be "derivative works". It's a little crazy that our legal system makes you CYA this much, but it's often necessary.

It's "developing new services" which essentially opens the door for Google to do anything they want.

Dropbox has to justify anything it does with your work in terms of providing a service to you. Google can justify doing things with your data solely for it's own benefit.

If Google compresses, re-encodes, or encrypts the files, they're creating derivative works. Google needs those rights in order to actually store the data.