The dev is not tracking anything. Google ads is… and like the other comment said if you have Google Play on an android phone then you’re being tracked.
I’d wager most people complaining about sync also have a Gmail account or shop on Amazon, or watch YouTube, or a million other equally or more invasive stuff.
Both. The text data is in the database of all instances that are federated. Your account credentials are only stored on the instance you’re registered to.