Basically, Instagram has updated a few of the subhead sections of its policy to reflect the fact that it is a part of Facebook now. Instagram can now share information like cookies, log files, device identifiers, location data and usage data with "with businesses that are legally part of the same group of companies that Instagram is part of". According to the Instagram blog, it's a wonderful thing for you:
Less spam? Great! Of course, this also means that Instagram is heaping its data over with the privacy nightmare that's Facebook. The data will definitely be used to target better advertising at you on Facebook, and to serve you advertisements on Instagram whenever that starts happening. Here is the relevant section from the new policy:
Affiliates may use this information to help provide, understand, and improve the Service (including by providing analytics) and Affiliates' own services (including by providing you with better and more relevant experiences).