An analysis of the T&Cs changes were done and discussed in this HackerNews thread
WhatsApp is technically correct that message and call content remain private and encrypted. What is happening is that businesses which host on Facebook will now also be able to have encrypted conversations with users. In order for that to work, the users encryption keys have to made available to these third parties. In addition, more meta data is being collected and shared with "Facebook Companies" and hosted third-party vendors. The "Facebook will read my messages" scare, I believe, is largely unfounded, but it is a sign that Facebook is becoming much more aggressive at monitising WhatsApp.
My view is they want to turn WhatsApp into WeChat, i.e. the one app in which you spend you entire day. See WhatApp Pay, UPI payment integration in India, forthcoming Reliance online shopping platform integration. Spot the direction? For none of those do they need to read your messages or listen in to your calls, but there's an absolute goldmine in meta data there.
That's also why they're so panicky in India, because it's their proving ground and stepping stone.
Also, there are different demographics between Facebook and WhatsApp. Facebook is losing its shine and becoming for "old" people. Integrating WhatsApp likely brings Facebook a large demographic who might not/not longer be active on Facebook. WhatsApp users are looking at incoming Facebook and thinking it's going to merge into Facebook or Messenger and are running. Watch this space, but I bet the same is heading to InstaGram soon enough.