When installing Kali from Microsoft Store, I wasn't prompted with a user agreement license.
Is Microsoft able to monitor my applications? How safe is it to use WSL in that context? (From privacy perspective)
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As mentioned in the comments of this question, Windows has many telemetry features. Ones which you cannot disable, either. There are some settings you can change to reclaim some privacy but in general, you cannot remove all the tracking features. This makes it a horrible operating system as far as privacy is concerned.
Additionally, their service agreement effectively gives them control over any content you generate on their system. This is also terrible for both you and your privacy.
If you're concerned about your privacy then don't use Windows at all. It is a horrible OS in terms of privacy.