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>When we select “Ask App Not to Track,” two things happen. The first is that Apple disables the app from using an Apple device identifier, a random string of letters and numbers that is assigned to our iPhones and is used to track our activities across apps and websites. The second is that we communicate to the app developer that, broadly speaking, we don’t want our information to be tracked and shared with anyone in any way.

>That seems easy enough. But No. 2 is where things also get slightly complicated.

>Ad-tech companies already have many ways to follow us beyond Apple’s device identifier. For example, advertisers can use a method called fingerprinting. This involves looking at seemingly innocuous characteristics of your device — like the screen resolution, operating system version and model — and combining them to determine your identity and track you across different apps.

How effective this all is will completely rely on how Apple reacts to the first app it catches breaking the rules.

See the Do Not Track (DNT) http header for how well #2 will work.
I remember when Microsoft introduced "Do not track" and enabled it by default many websites said "no we will not grant that request"- because the user has not made a choice but using the default choice.

Isn't it same situation with this. My Iphone had tracking disabled after updaring to 14.5. I have not made a choice and I am not being prompted for anything

I think the difference is that With this feature Apple is not asking for compliance but enforcing it. At least when it comes to the IDFA tracking. Fingerprinting might still be possible but its a start.
Users have always been able to disable IDFA tracking before iOS 14. It’s just that with iOS 14.5,

1. Technically, apps will have to prompt the users to enable it. 2. Policy-wise, Apple says that when disabled, apps should no longer track users. They can’t enforce this of course.