Of course – if the AI is supposed to give you an answer, they have to know what you are writing, so yes, logging your keystrokes is quintessential for every online service you interact with. You cannot get an answer without asking.

The wording is strange, though, and I’m not sure whether this ToS allows them to collect and process what you are typing while using their service, or all your typing.

Sorry to tell you, but you are indexed at least by duckduckgo, bing, ecosia, startpage, google, and even one of searx’ crawlers has payed you a visit.