Tracing requires knowing the destination of funds after more than one transaction.

If you witness me purchase a sandwich, you did not trace anything. If you witness me purchase a sandwich, and then witness the sandwich shop purchase meat from a butcher, you traced funds.

If a 3rd party actor or colluding 3rd party actors (not the sender or reciever in question) can reveal the path of travel of transactions, then there is potentially no privacy, as those transactions can been traced. Otherwise there is privacy.

Not that these retards use words literally anyway, but maybe it will help someone gain clarity.