Basically if you were high profile enough, people would watch your wallets to see what you were investing in/transacting with, and use that as market intelligence.

As far back as 2016 or so I recall someone specifically offering their blockchain analysis platform as a way to do this.

So you would use tornado to make the money you planned to invest/use appear "somewhere else" disconnected, to maintain privacy/security of a project.

Tornado and mixers and such become necessary specifically because all transactions are public - unlike in tradfi where transactions are opaque except to parties and intermediaries.

Similarly to how investors in tradfi tend to keep their investment strategies secret where possible.