Facebook's CEO (Mark Zuckerberg) announced this new tool was coming in May 2018, right before the F8 conference. Being able to empty your history of all the information Facebook gathered was something people who are concerned about their privacy have been waiting for, for a long time. After over a year and a half of waiting after his announcement, this functionality is finally accessible to all:
By following the previous link, you'll be able to view all the websites that sent information about you to Facebook, manage that information for each website and autorize (or not) each site to send your information to Facebook. You'll also be able to completely empty your history.
How can these sites sent my information to Facebook?
It's pretty simple really. More and more companies add what we call the Facebook Pixel on their website. This pixel, which is basically a hidden script that's installed on every page of a website, allows Facebook to get information on how well their ads performed. It also allows them to re-target you with ads from that company later on enticing you to purchase one of their products. So it's a pretty useful tool for marketing directors.
In reality, what's going to happen if I clear my history?
Basically, nothing much... Although Facebook won't have any more information about your external activities, it won't stop sending you ads. You'll keep on seeing ads, it's just that they won't be as targeted to you as they were before.
Also, Facebook mentions that it might keep some information for security reasons. So even though this tool isn't perfect, it's still a step in the right direction since having more control over your personal data is always a good thing!