“Personalized” search means keeping track of what you search and tailoring the results of your search queries to take into consideration your individual preferences. It may improve the efficiency of your search but it also gives Google a dossier on your search activities. Previously, Google only “personalized” the searches of those who were signed in at Google. Now, Google has announced it is personalizing all searches. You can still opt out or block Google cookies but this means you have to take an action to avoid being personalized. In the past, you had to actually sign in to be personalized.
Note that all search engines track what you search in order to place ads aimed at your apparent interests. What Google is doing now is to tailor your searches based on the information as well as placing ads. If you worry about privacy, block or erase the cookies that search engines place on your computer. I discuss cookie control in detail at Surf the Net Safely.
Search expert Danny Sullivan explains how personalization works and how to opt out at Search Engine Land.