The first thing to understand is that this language doesn't give Google ownership rights to your data. You, and you alone, own your content. Whether you wish to keep your content totally private, or share it with the world, that's your choice.
However, in order to honor this choice, Google Docs needs permission to display your content as you see fit. This is what we mean by a "license to reproduce." We need to ensure that when you click the "Publish document" button, or use the "Invite collaborators" option, we have the license to carry out your wishes. It is this agreement, between Google Docs and you, the user, that section 11.1 of our Terms of Service reflects.