It's a mix of both not understanding and not caring. Many think they have nothing to hide and while that may be true today, laws change and what was completely OK today, may be illegal or frowned upon tomorrow. People also don't realise that if and when they do make a small mistake and end up in court, what otherwise would have ended with a simple fine, can end up in a nightmare, just because the judge decided to order collection of data from Google on that individual, and while none of the data may be illegal, the pattern that emerges based on it may steer their fate into an unexpected direction.
Then there's the fact that many genuinely believe that Google products are free. It still doesn't register to most that when you get something for free, you're the product. You gotta admit, it's an ingenious business model, but it's also incredibly evil, especially in the wrong hands, and while some might say Google itself it not going to harm you in any way, that is in no way an assurance for that data being stored and used safely and unmaliciously by those with third-party access.