This is extremely common, the purpose is to prevent or at least identify racist hiring practices. How else are they supposed to know? They get an idea of who is applying, and an idea of who gets hired, and they can look at population statistics, and thus tell whether a disproportionate amount of certain minority groups are being rejected by a certain manager or the company as a whole.

Or alternatively you can tell if a job posting disproportionately has applicants of a certain demographic, so maybe white men tend to be hired in that job but it’s because the applicant pool is 95% white men. That would show that it’s not necessarily the hiring managers with the issue but either the HR outreach or the job itself has requirements disproportionately held by white men, and you can decide if that means you need to change something or that’s just something you need to live with for this role.

It’s allowed as long as it is only used for these purposes.