There's more information on the profile privacy settings page about what each feature does and what it actually is. With more detailed descriptions of what profile information is included in each category, you will be able to manage how you are viewed by your friends, or the wider Steam Community. Unless Valve makes a change to this new Steam behavior, it seems that we'll be saying goodbye to Steam Spy, as it collected data by polling once publicly-accessible user libraries. Game details essentially include the game titles that players have purchased or added to their wishlist in addition to other information such as achievements.
Steam Spy has been a tremendously helpful tool over the years, offering estimates on how individual games are selling and how many people are actively playing them, among other insights. Your total playtime though can be hidden separately from this command, so you can keep that secret while still showing off your collection.
Other third-party tracking sites such as AStats are also affected, unable to reach core data needed to calculate statistics.
"You no longer need to nervously laugh it off as a bug when your friends notice the 4,000+ hours you've put into Ricochet", Valve noted. Sometimes you're feeling social, and sometimes you're not; this setting should help Steam users be social on their own terms.
The public game library data was the crux of Steam Spy's operation, and such creator Sergey Galyonkin made the announcement via Twitter that, as such, it wouldn't be able to work anymore without that crucial data.
Valve says that it's got more planned for the future, such as a new invisible setting that allows you to appear offline to friends but still view your friends list and send or receive messages.
As an aside, Steam Spy has responded to the privacy update with some rather unfortunate news.
Valve's blog post explains that all users' game libraries will now be set to private by default, meaning all those floundering game libraries out there in cyberspace will be unreachable to SteamSpy. Developers apparently used Steam Spy data to gauge how well titles that catered to specific niches performed over time.