Without knowing much about the technicals, I believe it obscures/combines transaction signatures by default - like a coinjoin perhaps(?), hides node IP addresses, and generates new sender addresses as well as receive addresses
Discussion
As for Bitcoin, if you don’t run your own node (and/or use Tor/VPN), the node you broadcast txns to can see your IP address, as well as your xpub and combined wallet balance, if I understand correctly