It's a simple example of how the arcane telemetry they demand is actually far more dangerous to you than it first appears.
This is incredibly common when it comes to security and privacy issues, where it's not immediately obvious how things can be abused. (The truly obvious things tend to get fixed, after all.)
> I don’t think [...] your Microsoft account has anything to do with telemetry
My brother in tech, I think you're blinding yourself out of forlorn hope here.
Microsoft has spent over a decade increasing the mandatory "telemetry", which contains a complete profile all your computer hardware with serial numbers plus all the software you run and when you run it [0]. The same company has consistently made it harder and harder for anyone to not sign up for an account in order to even install the OS.
They already collect the data in a very deliberate and strategic way. What you ought to be seeking is evidence they don't keep it.