Apple's explanation for wording it this way is that it's impossible to block all tracking through technical means at the system level because there will always be new nefarious tricks that malicious people will try to use against you. They can only do it at the policy level and try to punish bad actors.
So if you don't want this asking you everytime you open any app (based on my experience it happens frequently) you can turn it off.
But yes, it could use a better wording.
Source: I'm a newly role changed iOS developer at my job.
WSJ: "Why the verbiage 'Ask Not to Track'? Why not just 'Do Not Track'?"
Federighi: "There are other techniques that developers over time have developed, like fingerprinting, which is a bit of a cat and mouse game around other ways that an app might scheme to create a tracking identifier. And it's a policy issue for us to say 'you must not do that'. And so, we can't ensure at the system level that they're not tracking, [but] we can do so at a policy level."
It really doesn't mean anything other than that. It's a binary decision.
The default in this case is to outright disallow it for any app requesting.
If the option is on then the app can ask, and the user has a choice to allow or disallow. Again, if it's off, the default is to disallow tracking.
If it's turned off: I want to opt out of all app tracking automatically
That’s the setting in iOS under Settings > Privacy > Tracking.
What does it actually mean?
If it’s turned off, does that means that apps are tracking you since they don’t have to ask?
If it’s turned on, does that mean apps have to ask and you can disable tracking per app?
Something feels very strange about the way this setting is worded. I’d have excepted something like: “Allow Apps to Track” [ On | Off ]