They simply show the users "how their data will be used" and "rights of both sides regarding the usage of the service".
You simply mention few variables like the company name, URL, etc. and get the output as a well-formatted HTML.
The documents created covers the most common stuff, you may want to customize it for you needs but they are a good starting point.
Also, optionally, Termsfeed can notify you when an update happens to the documents.