The New York Times recently attempted to explain the plethora of privacy options available on Facebook and how this has changed over the years. As I blogged earlier, the privacy policy has more words than the US Constitution. Flickr, the photo sharing site, only has about 350 words in its privacy policy; Facebook has upwards of 5,000.
Even if you lock your privacy policy down, your friends can still share some of your information with third-party applications: check to see exactly what's being shared. I don't recall which ones of these are ticked/checked by default but some of the information includes relationship status and political views.
http://www.nytimes.com/interactive/2010/05/12/business/facebook-privacy.html
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