It could be useful more as a labor saving device to enable censoring while allowing the human to engage in easy copy-paste. Examples I think of are inclusion of internal DNS names, usernames and human names and email addresses that may be intermixed with log or command output needed to debug some issue.

That said, if these strings are really sensitive and I'm too lazy (or not trusting the human user) to self-censor, I'd not rely on this particular kind of tool for censoring. I'd use local LLMs or cloud LLMs where privacy is part of the contract.