GPT, at least from my limited understanding, is a tool designed to continue the input. You feed it a sequence of tokens, it returns a tokens which it “believes” come next. While your impression is valid, it’s still a “completion engine”. ChatGPT and other products use GPT but have built a product around it. They are not simply frontends for GPT - they do a lot more processing than that.
Also, not trying to understate your impression. It’s pretty impressive how good it is, despite the compute needed for it. I would caution against overestimating its responses though. It does not “reason”, “think”, etc. Its purpose is to continue a sequence of tokens following a (super complex) pattern it has been trained on (super basically). When it claims to reason something, it’s because the people it trained off of did reason it.
I’ve seen this in a few places on desktop, and I have no clue why it’s even a feature. I’m not aware of anyone using it anywhere (although to be fair I haven’t thought to ask).
As for why it’s enabled by default, probably for visibility. The easiest way to get people to use a feature is to make them use it and make them explicitly disable it (if even an option). For AI training, they could theoretically just capture typing data and messages regardless of if the feature is enabled/disabled anyway.