It's concentric rings show the groups who can see a given slice of information, if you leave the default settings in place. Here's the service in 2005:
Of course, these are obviously all default settings, and if you're concerned, you can readily change access to your profile.
But it does show that Facebook has transformed itself in the last five years from a service were privacy was an opt-out feature, to one where privacy is opt-in. As any behavioral economist will tell you, that single difference can massively affect the choices people make. Facebook might easily claim, "Hey! You can change things as you wish!" But in fact, they've created a massive shift in the privacy settings of Facebook as a whole.
Why would they make those changes? The less privacy there is in general, the more irresistible Facebook becomes, because you can snoop on other people far more. And figure out exactly what to sell them.