Seriously, do you expect the average facebook user to comprehend this stuff? Really?
Facebook knows people don't pay attention to details, and even if they tried to, they couldn't figure it out.
If you truly disagree, I'd say it is because of the curse of knowledge...you've understood this type of thing for so long, that you can't imagine what it's like to not understand it.
Yes, I do. 35% of users adjusted their settings when presented with that dialog, and that's not including the people who had modified their privacy settings in the past, which made them not default to "Everyone".
Instant Personalization was a bad idea, but everything else was pretty straightforward.