Facebook still has the right to use all your shared information to target you with ads, and what's more, the policy actually encourages users to add as many preferences as possible so as to make for better targeted advertising.
Facebook is also honing location-based advertising. In a blog post, Facebook's Chief Privacy Officer Erin Egan said, "We're working on ways to show you the most relevant information based on where you are and what your friends are up to. For example, in the future, if you decide to share where you are, you might see menus from restaurants nearby or updates from friends in the area."
'You're in charge. Sort of'
Such is the age of the internet that a lot of people don't care about companies like Facebook using so much of their data for advertising, but for the more privacy-aware, the new policy is worth a read. Especially with points such as following:
"We receive information about you and your activities on and off Facebook from third-party partners, such as information from a partner when we jointly offer services or from an advertiser about your experiences or interactions with them."
To coincide with the policy revamp, Facebook launched a new feature called Privacy Basics, which explains what other people can see about you, what you can see, and how other people can interact with you. You can see it for yourself here.