The toolbar basically sends google information back on what the most popular sites are you have been visiting, etc.
However i think it only counts the sites you go to when you search via the toolbar, not sure.
Also, i think you might be able to disable it in the options, cant remember too clearly.

Anyway its a matter of personal choice i suppose, i personally dont mind if people see what i've visited, i mean i am sad.. i only visit Mudcat!