Fiendish levels of confuusion
This proposal is designed to confuse people, and direct them into wasting their time discussing the complicated implications, rather than confronting what is really the intention : trying to get an ever greater majority of people to use Chrome. So it will be the company's browser that does the tracking and assigns you to your pigeonhole, possibly irreversibly and for ever, and without your knowledge of which pigeonhole you are in. The key quote is :
"A browser with FLoC enabled would collect information about its user’s browsing habits, then use that information to assign its user to a 'cohort'"
So the real question is do you want your software watching what you do and then passing a judgment on you? And would you be happy for other companies / governments to be aware of what 'cohort' you are in?