It doesn't look like it in the full sense of "free". But part of how one pays these services is by running a permissive modern browser which allows the corporation to spy on you even when you already paid in currency. In a sense by depriving them of the ability to easily spy on your this workaround is closer to "free".
>My best guess is -- ChatGPT is running something in your browser to try to determine the best things to send down to the model API
There's no way this is worth it unless the models are absolutely tiny, in which case any benefits from offloading to the client is marginal and probably isn't worth the engineering effort.
It’s free as a loss leader. The trick is to upsell later. Unfortunately for OpenAI there are plenty of competitors with fungible products, so it might be hard to pull a classic monopoly rug-pull.
They see everything your doing because you send the text. But this is talking about everything about your computer system. You would not normally be sending this to them or having it involved at all. This workaround allows you to not involve unneeded information about your computer setup. It is not about avoiding sending prompt text.
And as for "but chatgpt isn't paid" (another commenter), well, then yes, that's even closer to free by removing this spying on your computer setup. But they spy on the paid users too.