they encrypt the content, but not the metadata. so Meta might not know what you're talking about, but will know who do you talk with, how often, where from, for how long, and so on. that'll often be more valuable for advertisers than the contents of the messages themselves.
they are collating and amalgamating data coming from a single IP
lol no shit. of course they're aggregating location data, this is how, among other examples, some therapists ended up having their patients recommended as Facebook friends in the past.
if they see someone being frequently in the same location you are and at the same time you are, they will leverage your relationship to serve you ads based on their (and, presumed by the algorithm, shared to some extent) interests.
from the top of my head, that won't include lemm.ee, sopuli, beehaw, szmer.info, slrpnk.net, sh.itjust.works, or other threadiverse instances like kbin/mbin.
and it's a part of Fediverse, so you can follow the blogs from your Mastodon account. and I think a reply from Mastodon will show up as a comment under the post.
reading the description, it'll be most effective in the US because of the STIR attestation being one of the criteria. other than that, it'll probably work as well as the rules you configure.
without them changing their habits? you don't.