Looks like they developed the favicon service for their search engine so they could show favicons in search results.

It actually increases privacy there, DDG already know what domains your search returnedy and the alternative would be fetching favicons directly from websites, leaking information to them before even clicking.

Then they re-used the favicon service for their browser without rechecking the privacy issue and realising that browsers have different privacy needs.

Completely over-looked the 3rd - that they're human and made an honest mistake that they're attempting to rectify.

But from your attitude I'm guessing that think you've never made a mistake...

Sure humans make errors, but this service is for a privacy-concered-company like you or me walking over a red traffic light without looking to the left or right and beeing crashed by the biggest Truck one can imagine. Anyone who belives in an error is beyond help.

The issue was highlighted from open-source code from a company who proactively works to reduce privacy.

It seems rather reasonable to assume that in the goal of maximising privacy in search engines, it would be wise to add user-friendly and convenient features so that the alternative is appealing and does not sacrifice too much convenience.