Shilohbob, You're welcome.
My primary reason for posting this was to understand why they're doing this, but I'm glad some users will read this and avoid the update.
Unfortunately, most people using their computers are not tech savvy people who read forum posts, unless they're already having an issue and have posted a question to resolve the issue..
The diagnostics tracking service is incredibly difficult to spot, as people won't probably open the task manager and manually go thru 70 process names just to make sure a bad process is not running.
It's even more difficult to detect as this service does not interact with the desktop, there are no open windows to inform the user that information is being sent over the internet to Microsoft, and he/she is being tracked, and there is no performance hit.
It's like a "perfect-spyware", they only exception being it's easy to remove once spotted.
I still think it is a bad move by Microsoft to include this as an "Update".
Like BritFox wrote in his post, this does not fix a "specific problem" with the OS, does not "improve" functionality in any way, and offers absolutely no benefits as far as the end user is concerned. The only entity to benefit from this, is Microsoft.
This isn't an "update". It should not be included as an optional update.
They can offer a download link in their website and clearly inform the users about the massive amounts of data this service will send back home to Microsoft ("This tracking service collects data about functional issues in Windows" -- is NOT a proper explanation of what kind of data it will collect. It does not inform users that it will collect every search query, every file he opens, every website he visits, his/her name, email address, preferences and interests, and pretty much every keystroke ).
If the user chooses to install it after reading it all, then fine.
It's NOT a typical update. It's NOT what an user expects to be installed by Windows Updates on a non-beta OS he/she has purchased. Users are "Consumers", not "non-paid software testers".
It's a sad day for us long-time Windows users. Windows is becoming the next Android. Microsoft is becoming the next Google. Very sad.