They see everything your doing because you send the text. But this is talking about everything about your computer system. You would not normally be sending this to them or having it involved at all. This workaround allows you to not involve unneeded information about your computer setup. It is not about avoiding sending prompt text.

And as for "but chatgpt isn't paid" (another commenter), well, then yes, that's even closer to free by removing this spying on your computer setup. But they spy on the paid users too.