Yes, this is really bizarre. I get this kind of policy for some kinds of platforms, but not Drive, Docs, Sheets, Slides, and Forms. Those are my documents, and I should be free to put whatever I want in them.
What if I just like to collect and share old conspiracy theory stuff that I know is wrong? For whimsy, historical, whatever purposes...
This policy does not apply to private files. I just want to point out based on your comment that none of what you mentioned matters unless you share the document publicly.
Based on Google's wording[1], it seems you just need to share that document with one single person; if that person flags it, at that point Google is allowed to investigate even if the document is not public.
[1] "After we are notified of a potential policy violation, we may review the content and take action, including restricting access to the content, removing the content, and limiting or terminating a user’s access to Google products."
Looks like Google wants you to enter someone's email explicitly to share something with if you don't want this policy to kick in. I suppose even in theory there isn't a way to know the intent behind whether something is meant to be shared with just a few people or publicly if "share with anyone that has the link" option is used.
Yet. Once people get used to it, it will be extended to private files. Likely they will even build it into Android and create an API to report citizens storing questionable documents.
What if I just like to collect and share old conspiracy theory stuff that I know is wrong? For whimsy, historical, whatever purposes...