This bug is (not surprisingly) also present in the server versions of
Ubuntu. I don't think such a default behavior is acceptable in a server
distro.

Actually I don't even think it is acceptable in a desktop distro.

One can change whether newly created home folders are world-readable or not:
sudo dpkg-reconfigure adduser

-- 
private homedirs and separate XDG_PUBLICSHARE_DIR (/home/share/<username>)
https://bugs.launchpad.net/bugs/204577
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