It enables Amazon devices to transparently connect to amazon with near zero user configuration as long as the device is within range of an authorized AP or another sidewalk device owned by anyone. This makes Amazon devices to "just work" in more places and most users will love it because they don't know and/or don't care about the privacy and network security implications.

It uses much longer range radios (900 mhz range) to blanket areas where most home routers don't reach.

Comcast does the same thing but with standard Wifi with their routers, with some hidden SSIDs you can't opt out of (Xfinity Home etc.)