There's a very delicate balance when it comes to targeted advertising and violating user privacy — some folks even think it isn't possible to have both at all — but Google would like to establish a new set of standards for browsers that can allow the former without too much concern about the latter. The company is calling this initiative "Privacy Sandbox," and the company hopes it might help prevent privacy-violating workarounds like so-called "fingerprinting."
The new Privacy Sandbox is predicated on the fact that blanket blocking of cookies hasn't helped user privacy. Workarounds like "fingerprinting" — which build an image of your device based on details like reported hardware, software versions, and installed fonts — still allow for identifiable tracking, but without the convenience of locally stored files that can be easily deleted. Ad networks and sites can still track you, you just can't do anything about it without cookies to throw away.
Even if there were some magic bullet to prevent fingerprinting, without targeted advertising, the ad revenue for publishers (read: the content creators of the internet) would decline significantly. The internet depends on professionally created content, and often the margins aren't very high. Without that sort of content, which includes sites like ours, the internet would be a pretty sad place.
The new Privacy Sandbox is meant to address both of these concerns, providing advertisers a way to show you targeted (and more profitable) ads, without resorting to privacy-violating and unblockable practices like fingerprinting to do it. Google calls it "a secure environment for personalization that also protects user privacy," and it's a clear compromise, but one that might work better in the long run than the blanket blocking of tracking data like cookies.
At this point, the Privacy Sandbox is just a concept. Google is actively seeking out feedback from browser developers, privacy advocates, publishers, and advertisers for their own feelings on the subject. The company would like to preserve the APIs required for things like ad selection/targeting, conversion measurement, and fraud prevention, without forcing anyone into using a workaround like fingerprinting, and it's put together a series of explainers for how the sandbox might work in the meantime.
While Google wants "to move things forward as quickly as possible," it also understands that major developments and new standards like this "require significant thought, debate, and input from many stakeholders, and generally take multiple years," so you probably won't see any of the new Privacy Sandbox features in Chrome for a while yet.