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They’re not. And they won’t see any of your contacts. It just allows the app itself access to them.
There isn’t a single service on the planet who I would trust to allow their app to see my contacts.
The app asking for the permission is not acceptable. The permission should not exist at all. Both mobile OS should only be permitting users to explicitly import contacts that they choose, with literally no way for any app to see the master list in any context.
Signal has been through every trial and tribulation in existence. They’ve been audited by a dozen different companies, they’re open source, they’ve been subpoenaed by the government, etc. You’re just being paranoid.
The mere existence of the permission is obscene.
It’s not, at all. It’s incredibly convenient