They are a CDN, they are storing data and delivering traffic under contract with the site owner. That's not strictly a hosting company, but that's pretty much irrelevant: They see traffic because the site owner has chosen and contracted them to provide a service that requires them to see traffic. The same way that traffic flows through AWS load balancers because the site owner configured that, or through the servers of a traditional hosting company because the site owner choose to host there.

One certainly can argue against Cloudflare specifically, or against centralization in general, but IMHO "they see traffic" isn't a very useful argument on its own.