They get the traffic data from some third party, not by following their users like gmaps.

https://www.magicearth.com/faq-en/

Do you share data with third parties?

We send position data to our traffic provider to generate real-time traffic information. The data is anonymized on the phone, using a changing key (so it’s not linked to you), and it is deleted after 5 minutes.

They have a good privacy policy though. I haven’t really had many issues with their app.