I haven't read the privacy policy (who does?) But I am willing to bet that it doesn't restrict MS to these purposes and in fact allows them to do whatever they want for any reason.
>So devs can see what I've been upto on my own computer.
If you consent to sharing the error with Microsoft. It may contain some information about what was running to assist with finding the issue. There is a strict privacy policy for what this data is allowed to be used for.
>I assume the problem is the default is "send" rather than "don't send"?