Can you point to where it says that in the report? It actually says:
an IME will commonly reach out over the network to a cloud-based service for suggestions if suitable suggestions are not available in the input method’s local database.
the keystrokes of Sogou Input Method users can be decrypted by a network eavesdropper, informing the eavesdropper of what users are typing as they type.
I assume they mean "if suitable suggestions are not available in the input method’s local database". Like you start typing a word, and when it doesn't find any match locally, it goes to the server. After that, any additional keystroke gets reported to the server "as they type".