I assume it not completely locked down, but does it mean Google doesn’t have access to everything like I assume it does with Android?
Even without explicit installation of GApps, Lineage still uses and connects to quite a few Google services in the background.
It’s a great way of keeping older devices up to date, but not much more than that.
Yes, this is the crux of LineageOS. There is a fork called DivestOS that is more libré and reduces dependence on Google services, as well as having bootloader re-locking for some devices.
From what I get, if your phone is anything other than a Pixel still within supported lifetime, then LOS is decent. At that point it’s mostly a hardware tradeoff (use a phone that all of has active lifetime support, is bootloader-relockable and has Custom ROM support) than a software one.
It is good for privacy as long you do not install Google Play Services and also do not download any apps that is bad for your privacy. However GrapheneOS is a better option which additional security benefits.