privacy coins keep sender and receiver information hidden from anyone's view. It is very useful for people who do not want government or authorities to track how much crypto they have and using. The darknet which is much bigger than the typical internet we use has a lot of people wanting to keep their privacy when making transactions.
There are many methods to keep coins private. If you look at monero and read into the coin they use multi-signature to conceal sender and receiver. A lot of crytonite coins have this feature.
I doubt Government won't go after these kind of coins.