While MS does not help itself with some of the more invasive tactics, some of the telemetry is super valuable in detecting issues with drivers, updates and many other things.

Even the episode of MS08-067 https://darknetdiaries.com/episode/57/ has some interest bits on early telemetry.

It's not terrifying but it does reveal the scale, this isn't a licence check against something like genuine.microsoft.com this is a completely different scale all together

Having a small number of hosts and smaller number of queries would likely result in a worse situation: queries would be impossible to filter because filtering 1 host would likely break too many things.

Also, in terms of telemetry, I consider Microsoft to be the disabled child in the classroom. I am sincerely convinced they have absolutely not the skills nor the vision to turn the data they collect into a process that could be personally harmful to me. Google and Apple, on the other side, specialize in employing engineers and product managers that have absolutely no concern to privacy. Their only constraint is to make sure whatever they do is lawful, which is, in my opinion, the worst way a company should behave. Until today, I haven't seen Microsoft do anything worrying except showing traces of telemetry collection in my router logs.

Never underestimate your enemy.