That's fine, but "Private Cloud Compute" has nothing to do with iCloud; nor does it matter if you're using iCloud or not.
Private Cloud Compute is essentially Apple servers that handle more complex AI request that can't be completed locally on your device. For more complex requests, information related to the request is sent to Apple's servers for AI processing. This could be a photo, a chunk of an email, or some messages, etc. This log will show you what was sent in those instances.
Not nocessarily. I just checked my log, and it's only 59 bytes. It's empty because I haven't done any AI requests in the last 15 minutes.