Privacy protection is sometimes called WHOIS protection because it hides certain information about a domain name’s owner that would otherwise be discoverable through a WHOIS lookup.
WHOIS is an international organisation that stores and displays data about domain names and their registrars, including when they were registered, when they expire, who registered them and where the domain names are pointing.
This means that anyone can enter a domain name into the WHOIS database and retrieve the information. Privacy protection is an optional extra which allows you to combat this if you’d prefer to remain anonymous.
Privacy protection isn’t for everyone, of course, but if you’d prefer to replace your name, address, phone number, email address and business name with a set of generic, non-identifiable information, then perhaps it’s the route for you.