What data are collected by the browser extension, and when?

First time Bitwarden user here. I was surprised to see that the Firefox Bitwarden browser extension not only prompts you to add passwords, but also collects the password you have already entered. This is not the behavior I want for a password manager, because it means that it is passively recording everything I’m inputting.

I spent a bit of time browsing the source to try to figure out what’s going on. I found this in
clients/apps/browser/src/content/notificationBar.ts:

if (!disabledAddLoginNotification || !disabledChangedPasswordNotification) {
  collectIfNeededWithTimeout();
}

This suggests to me that if you disable these two options, the website collection will not occur. However, it’s not clear to me if it happens in other contexts, nor is it clear exactly what the collect() function (downstream of this) is doing. Therefore, I’d like to ask the community/developers:

  1. Does disabling Add Login Notification and Change Password Notification in the settings stop Bitwarden from observing my webpage, as the above code suggests?
  2. When these options are enabled, what data is collected and how is it processed?

In general it would be great if this information were a bit more clearly stated on the website, as well as how to turn it off.

Thanks in advance.