I'm pretty sure that these are both misunderstandings as to what is actually going on, here. The toggle is intended to remove the "personalization" in those ads... not the ads themselves. The feature just asks Apple not to base the ads that they show you on your past activities. So you still get ads; they're just slightly more randomized.
Mind you, even this still makes it worth toggling the feature; it's just not necessarily as beneficial as most people commonly assume.
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