Capability
it's only if you're using the iCloud-based service that Apple will scan those photos AFAIK.
That is how it has been presented; the problem is that the capability to do far more exists simply because it is a local app that (as far as I can tell) the user has no control over.
The discussion around privacy and capability needs to take place because this capability is, for some three letter agencies and their equivalents around the world, a wet dream come true.