You (others) probably clicked "accept ToS" without fully reading them. Oh well. If its free then you're the product.
I didn't see it that way, this is rather scary.
Yes, everything you type is sent to their servers AFAIK.
I would guess more than just what you type. Probably everything in text and textarea elements. So, if you reply to an email, it's all the text from the original sender in addition to what you type.