"Legitimate interest" is a concept from GDPR, which is the EU's major legislation around digital rights. "Legitimate interest" is an extremely soft concept that basically says "a company must have some reason that is not obviously bullshit to process your data." That includes advertising. "We need to know your age, gender and city so we can decide what ads to show you" is considered "legitimate interest." See? Soft.
What it doesn't cover is "We just think it's desirable to accumulate as much data as we can about you for no particular reason and maybe we can just sell it one day, idk." That would not be considered "legitimate interest." Similarly, asking for e.g. a user's phone number but having no particular explanation for why you need it would not be "legitimate interest."
So when you see "legitimate interest" cookies as a category, you can interpret that as "cookies that have some purpose-- including advertising-- as opposed to literally no purpose other than superstitious data hoarding." Block them.
You could also just replace all that with "It's a load of bullshit that data hoarding companies managed to convince EU lawmakers was a thing in order to legally hoard data they can't otherwise legally hoard.
It's not thaaat soft. It's not quite clear what it means, exactly. The courts still have to work that out. But you will not get away with just any argument.
It's never legal to collect more data than necessary and/or for an unspecified purpose.
Tracking for personalized ads could be based either on consent or on legitimate interest. If it's consent, then they need to tell you up front what specifically they use the data for and some other things. If it's legitimate interest, they can just start doing it, but still have to tell you afterward and also inform you that you have the right to opt out.
I guess, practically, whether a company claims one or the other is whether it feels lucky about a court case. With consent, you are on the safe side but it's a little harder to get. Legitimate interest may get you more ad money in the short run but eventually, maybe or maybe not, a fine.
Normally they ask what kind of cookies you "allow", so you have to remove it if you don't want them to collect your data.
Most of the time there are 3 levels you can choose:
accept all. Which means they can use cookies and collect data as they want.
allow necessary and legitimate interest cookies, which means they collect some and often it means targeted advertising.
only necessary cookies. That's the minimum setting that only allows what it needs to run the page and gives you random advertising.
You normally have to tick the option you want them to do and remove the tick of what you don't want to allow. But it depends on the wording if they asking you to "ALLOW" or "DENY" the options.
It'sintended to be used when the cookies are actually required for the app to work. For example, to preserve your login, you need a cookie, no way around. Unfortunately, as mentioned by others, it's often abused
The GDPR prohibits processing of personal data, unless there is a legal basis for it. Personal data covers a lot more than you think, as does processing.
What counts as a legal basis may be seen in Article 6 of the GDPR. Consent is one option, but it must be informed and freely given; a very high bar. If you have a legitimate interest, you may process data without prior consent. However, you must still provide the "data subject" with information and give them the option to opt out. They must tell you the legal basis, which they have done, but also what exactly that their interest is. (And a couple more things.) There should be a statement somewhere containing that information.
The GDPR gives "direct marketing" as an example of a legitimate interest. Some DPOs interpret the term extremely narrowly, though. It's a contentious issue. The courts will work it out over the next few years.
It’s to differentiate the predatory ad-targeting/consumer-profiling cookies you’re meant to keep from the placebo ones you can turn off to feel more comfortable sharing your data with the data miners.