What is the threat that this mitigates?

An eavesdropper cannot see the content of your keystrokes, but (previous to this feature) they could see when each keystroke is sent. If you know the target's typing patterns, you could use that data to recover their content. You could collect the target's typing patterns by getting them to type into a website you control with a Javascript enabled browsers, or from an audio recording of their typing. (Some online streamers have been hacked as of late using AI models trained to steal their passwords using the sounds of them typing on their keyboards).

It's quite good at decoding my own typing, although I am a quite aggressive typist and that may help. I haven't tried it on others, though (honest, officer).