Depending on the browser you use, the Screenshout plugin for Confluence may use a remote web service to polyfill certain browser features. Specifically, browser features that allow the conversion of html content to a png image for embedding into Confluence.
If you are using a browser that lacks certain features, Screenshout will send all of your screenshot and annotation data to a web service to convert it into a png image. Currently this web service runs on AWS Lambda in the US-East region. This service is stateless. It doesn't store any of the data it receives. It also transmits the data over https
To avoid the need for a web service, use a recent version of Chrome or Firefox.