it hides the card number from the merchant
Kinda. They won’t get the number that is printed on your card. They instead will get what Apple calls the “Device Account Number”, generated by your card issuer and unknown to Apple. But your Device Account Number will not rotate all the time.
does not send data to Apple
There is some data sent to Apple. But not full details of specific payments. The payments still work the same as with a physical card and are between you, your bank, the merchant and the merchant’s bank and payment service provider(s). Apple Pay is not a payment method like PayPal, it’s a brand name for a set of technologies provided by Apple to use your phone as an EMV payment card. (+ in some regions other kind of payment methods) Apple will still get some info like how many cards and from which issuers are in your Wallet app. They also act as an intermediary for E2EE information passed between your card issuer and your Wallet app, ie your phone will not talk directly to your card issuer but use Apple servers as a kind of “proxy”, for example to show information about past payments. So there is some metadata that Apple could use for statistics or theoretically also to try to learn more about your payment behavior.
Personally I think there is not really a difference between using a physical card and Apple Pay when it comes to privacy. And there are some security benefits with Apple Pay. But the privacy boon you would get by not using card payments if possible. I hate handling cash myself, but there is no other widespread payment method that gives you comparable privacy. Something like the digital euro or Taler could come close, but right now that doesn’t exist yet or isn’t widespread enough.