Yep

It's better for privacy in that the platforms themselves collect only the information necessary for interactions to work, but 'worse' in that the information must be available openly.

Apps like Facebook and Tiktok request permissions to collect any data they can get their hands on, including sensors on your phone you might not have known about and extensive fingerprinting across the web browser. But they keep that data to use, abuse, and sell themselves. A random person on the internet can't access it, but powerful companies and government agencies get to do that instead.

Federated platforms only collect the data needed to function (ex. Upvotes, comments, and the accounts they're attached to), but then that data must be accessible to all instances in order for federation to work.

In my opinion it's still a lot better, but people should know how it works.

If you want to have a private conversation or group on the fediverse, there are separate platforms for those.