Does that mean that the "default" keyboard on Android does not respect my privacy?
As in, what does it do? Should I be worried about entering username, passwords etc from my Android device?
The "default" keyboard differs from device to device. Most devices have a closed source keyboard either from Google (gboard) or from Microsoft (swiftkey). If I remember correctly, both send subsets of what you type to the mothership and pinky swear to only use it for product improvement and guard your data with their lives.