The ONT's job is to translate from (typically) Ethernet to the optical fibre, and nothing else. In networking terms its "Level 1"; concerned only with moving bits from one end to the other. Most ISPs will provide an ONT which does that and nothing else, and then a regular router/firewall that plugs in to the ONT via Ethernet.

Your security barrier is the firewall in the router, plus whatever encryption you apply to comms outside it. As long as you get that right your ISP can't see what you are doing apart from the to/from addresses on your packets (which can't be hidden, obviously).

ISPs generally push their own managed router/firewall at you because that way when something isn't working you don't wind up with arguments about who's fault it is, and the ISP can troubleshoot your router. But in my experience they have no problem with you unplugging their device and plugging your own in instead.

I haven't seen an ISP which does the ONT and the router in a single box. Its theoretically possible, but would be a bad idea for several reasons. One is security, as you say. Another is that the fibre can't be extended with more wire, unlike a copper phone line. So the ONT tends to be a small wall-mounted box with an Ethernet jack in it. That way your Wifi access point isn't stuck low down next to your front door or something.