IMO, the benefits are from having your interests represented in a structured format. For example, you can now go to Pandora, and Pandora knows what music you like [and what music your friends like]. You can start actually building up an identity and using it across the web. There are tons of possibilities for features useful to users that come from having a structured list of what you like and don't like. Hopefully you'll see Facebook make good on the promise to give you more useful things based on the structured information in the near future.

The privacy changes are a side effect of having these be connections instead of free text. Keep in mind the number of connections that an average user makes (all the Likes they attach to Pages, to Open Graph objects, friend connections) - would you have a Privacy control per connection? It's already not an easy task to keep the privacy controls so the average user can understand and use them correctly [and we can always improve this] -- just imagine the complexity we'd add to the system. What exists instead is the ability for you to control the visibility of all these connections on your own Profile. "Public" means that your association with these objects may appear elsewhere [for example, a friend may reveal that you're friends with them, or a Page may reveal you Like that Page.]. I think this is a decent balance between giving the user what they want primarily (to control whether visitors to their Profile see that they are connected to something), and managing overall complexity.

[Edit: this is my opinion, I perhaps don't know enough about the privacy decisions to represent them completely. ]