What’s wrong with showing ads simply based on content a person is looking at?

That's called contextual targeting: " If iOS 14 users opt out, they will still be shown ads, but they’ll be based on other methods like contextual targeting rather than based on their IDFA. " https://clearcode.cc/blog/apple-idfa/#apple-skadnetwork

That works so poorly Facebook doesn't even bid on showing ads for those users currently: " And Facebook doesn’t even bid on iOS users that have Limit Ad Tracking (LAT) enabled " https://www.adexchanger.com/data-exchanges/what-do-apples-pr...

Does it work too poorly on its own, or too poorly compared to tracking ads? Perhaps their value will go up with less presence of the latter.

The issue is not effectiveness as much as measurement. Advertisers value the insight obtained by tracking user response to ads. That is something they are willing to pay premium for. Without the ability to do measurements, Facebook does not provide as much value.

Ad with id X was shown, Ad with id X was clicked, Ad with id X led to a purchase. Is it that important to know more than that?

Sometimes I don't understand what advertisers mean when they keep reassuring that all the data they suck is totally anonymized with the objective of delivering more personalized and relevant ads. How can it be personalized if you can't pick me out of the anonymized lot? If you can, then what good is the anonymity? Probably its me who just doesn't get it.

I know your HN username is "noisy_boy", I can track your HN posts/comments but I have no idea who you are, where you live, etc.

That's how anonymized data _can_ work. Of course it's also easy to mess that up and leak data about the underlying person.