Merri, that is more or less what it looks like they are doing. Not filesharing per se, but setting up p2p (peer to peer) networking software inside of their apps. What it does is unclear from the site. It could very well be that they are using it to host application files, or they may be using it to just update ads.
One thing odd is that they say they will only share your info with their partners under very specific circumstances, but then you get this confusing bit of gibberish later on
"The Service and our websites may contain advertisements, references and links to other websites and organizations. We may also use third parties to display or serve advertising on the Service and our web-based newsletters or other communications which you may choose to receive. Some of our business partners (e.g., advertisers) use cookies and web bug technologies on our site to measure advertising effectiveness. We have no access to or control over these technologies. This privacy statement covers the use of cookies by http://www.mostfun.com only and does not cover the use of cookies by any advertisers. You should be aware that different rules might apply to the collection, use or disclosure of your information by third parties in connection with their advertisements, promotions and other websites you encounter on the Internet. The use of such technology by these third parties is within their control and not ours. Even if we have a relationship with the third party, we do not control those sites or their policies and practices regarding your information. This Privacy Statement does not cover any use of Personal Information that an Advertiser or ad server may collect from you. We encourage you to investigate and ask questions directly of them in this regard. "
did they really just say they have content in their ads and newsletter that they have no control over?
it's interesting, and having a peer to peer network connection on your machine that you have no control over, or in this case knowledge of, opens many doors for all sorts of nasties.