Nope. It just happens to be on everyone’s device and usually enabled

Yes, and when it's enabled it has more privileges than most other apps, doesn't it? But yeah you can still remove the app.

Btw, maybe related, on iOS I have "app privacy report" enabled, to show me a list of apps and the recent entitlements they used. Every Apple app, even those that don't need access to them, is shown as having recently accessed my Contacts. I find this weird. Anyone know why they do that? e.g. I've never even used the Health app and yet it's accessing my Contacts for some reason.

It’s basically the same as any other app, there are some special permissions it has to integrate with the OS a bit better but nothing too interesting. Not sure what’s going on with Contacts but it might be a bug?