No, actually you DON'T understand what was happening. It had nothing to do with whether certain information should be kept private from others viewing a member's tree - it had to do with the ability of the member to see private information IN THEIR OWN TREE, which the Ancestry system was deleting. In other words, if you tried to save information about your father and he was not shown as deceased in your tree, it would delete the information and replace it with the word "private," even though you should be able to see it in your own tree. Similarly, if you entered your OWN information, it would delete it and replace it with the word "private.
In short, the issue under discussion in this thread had nothing at all to do with "identity thieves," etc.