They need a license to your work in order to distribute it, and display it to others or perhaps even you.
These clauses have been in TOSs for years and years, and only now people have taken notice. The average person doesn't know much about IP though, and probably couldn't tell you the difference between a copyright and a patent.
Companies sometimes do overreach in this step though, conveniently claiming rights to use your images royalty-free in advertisements for the service and around their site without you being involved. It's important for people to know what they're signing over, and perhaps it is more than necessary or intended in some cases. However, the mere notice that you are extending a copyright license to a company to whom you are uploading media is not in itself suspicious, unusual or an attempt to take rights from you.