Yeah its to promote GitHub, always has been. Game Off has been around a while and is an established jam.
Yes MS is used on military kit. Its also used on hospital kit. Its used everywhere.
Are MS the worst corporation? Probably not - X, Amazon, Apple, Google and Facebook/Meta all spring to mind as corporations that are overall far “more” evil than MS.
Will they use the code to train AI? The internet is about 50% AI generated at the moment so training an AI on the internet now brings you closer to model collapse, but maybe they will. But will I be writing my best production quality code for a 1 month game jam using secret proprietary tech? No. No I’ll be rushing like a lunatic and sticking things together with duck tape and wishful thinking because its a 1 month game jam and I have a life and a job and a weird obsession with eating sushi that now I write it out seems unrelated.
If you really care about privacy, then your only option these days is to get off the internet.