Yes, the dialog should be made clearer and mention the permissions granted before one clicks "Allow". This seems tracked at https://phabricator.wikimedia.org/T91825
That said, I don't see any private information being recorded by OSM once one clicks "Allow": https://www.openstreetmap.org/user/new is opened, where one can see that the form is prefilled with the email address, and the account is created only after confirming again.
The feature was requested at https://github.com/openstreetmap/openstreetmap-website/issues/1146
Nemo