The idea is simple: to control the traffic by having a sensor on each car that allows the traffic control infrastructure to detect vehicles on the road.
Such is the case of traffic lights with this technology. The sensors would send data to the traffic lights controller on a predefined range such that the traffic light detects how many cars are on each lane and take smart actions to control the existing traffic.
With this data, the traffic light controller can decide the amount of seconds for each lane, and with this intelligence the traffic would flow just as well as it would with a standing police officer in a traffic intersection.
There is no need to include private information on the sensors, however to increase the accuracy on the traffic controller, two additional pieces of data besides presence detection of a car could be utilized to this invention: speed and direction.
The technology exists today; the benefits are many for the commuters as it would save time and money. The traffic flow could be improved reducing the consumption of gas or electricity of the cars on the road tremendously.