Just like Google Analytics, Clarity records every bit of information about the user - her device, technology, and location - as well as the user interactions with your website, including screen scrolls and mouse movements. You can check how the tracking script works by looking at its code on GitHub.
The data collected by Clarity is stored in the Microsoft Azure cloud service. Microsoft has access to the data. For more information, see Clarity Terms of use.
I encourage you to read the extended Privacy section on Clarity FAQs page.