On Facebook, people talk about births and deaths. They share party shots, ultrasound scans and deliver news about serious illnesses in a way that was unimaginable just a few years ago.

Facebook doesn’t want that openness to end, which is why the company has been trying to put its privacy problems behind it. But a big settlement with the Federal Trade Commission is once again putting this thorny issue front and center for the world’s biggest online social network.

Facebook just agreed to settle federal charges that it violated users’ privacy by getting people to share more information than they agreed to when they signed up to the site. As part of a settlement, Facebook will allow independent auditors to review its privacy practices every other year over a 20-year period. It also agreed to get approval from users before changing how the company handles their data.

Here are some common questions and answers about Facebook’s privacy practices and what they mean for users.

Why is Facebook constantly pushing people to share things? Even before it became a big business making billions in advertising revenue, Facebook’s purpose has always been to let people “connect and share” – its motto – with their friends, families and acquaintances. Over the years, as it grew from an online network open only to college students to one with more than 800 million users, the company has pushed the envelope, encouraging people to share more photos, updates, links, and music. Some of the latest apps are let people automatically share news articles they read or music they are listening to.

Facebook’s view is that people want to share more and that the company is giving people the platform to do so. Says CEO Mark Zuckerberg in a blog post: “We made it easy for people to feel comfortable sharing things about their real lives.”

So this isn’t all about making money? Facebook, which is expected to go public next year in what could be one of the biggest IPOs in history, makes the bulk of its revenue from online advertising targeted to its users. The ads users see are based on things they share on the site. Research firm eMarketer estimates that Facebook will bring in $3.8 billion in worldwide ad revenue this year and $5.8 billion in 2012. As a privately held company focused on building up its technology, Facebook has not made profits its outright goal. Rather, the company has cultivated an “if we build it, they will come” ethos. The more time people spend on its site and the more information they share about themselves, the better companies can target their ads. The more users Facebook attracts, the more people will see the ads so the more it can charge advertisers. However, as a public company with profit-seeking shareholders to answer to, Facebook’s goals could change.

How does Facebook use the information people share to make money? Facebook, like Google and other companies that rely on advertising, targets ads to people based on their interests. Businesses can pick who they want to show their ads to – by location, age, hobbies and other things they share on Facebook. For example, a bridal magazine can target a promotion to women who have got engaged in the past six months.