all your traffic goes through them right?

Depending on provider and intended purpose… strictly speaking, a DNS server tells your computer that example.com resolves to 169.254.169.254 and nothing more.

However, for example, if your DNS provider adds ad blocking, they may choose to change ads.example.com from 169.254.169.254 to 127.0.0.1 thereby preventing any advertiser JavaScripts from being requested. This is fine and all, but you’d have no way to be automatically alerted if they changed it to 123.234.123.234 and serve their own blank scripts.

If for example your DNS provider provides region bypass for streaming providers, they could resolve streaming.example.com from 169.254.169.254 to a server in another country with address 123.234.123.234; and route your request through that in order to circumvent the region lock.

These are all fine and well, but if the provider was compromised and/or sold to malicious actor, they could resolve your-bank.website to a phishing site, and then MITM all the traffic just like the region lock bypass example.

So… in theory, it shouldn’t do anything more than resolving, but in practice, it may be hard to detect, and they could be doing more than just resolving.