1. They will sometimes use the data for training their RLHF stuff, to "prevent harmful use" of the services.
2. The clause is exhaustive and therefore they won't use it for training, as otherwise that'd be mentioned, and are just going to log stuff for the usual monitoring purposes.
This is a storm in a teacup. I don't even know why I should care. If MS crawl some web pages I've written and AI gets slightly smarter by reading them, or if I have a chat with the AI and some engineers use it to make the AI work better, great. It's very hard to imagine concrete, real harm from them being able to do this, though I can understand why companies might worry about it spitting out their source code verbatim in some cases.