Privacy

Your IP address says far more about you than you think. Your IP address can generally automatically identify what country and continent you are on. Who your ISP is. Possibly narrowing down to even your local region. At which point they simply need to find some marginally plausible reason to petition the ISP to identify who that IP address was leased to during x period of time. And then all of a sudden you're not very anonymous.

That depends on which groups play ball. IP addresses are geographically distributed, and since most people use VPNs (and Wikipedia disallows VPNs anyway), it's relatively easy to track an IP address to a geographic area. Further, companies buy IP blocks, so you can also usually figure out which ISP that IP address is associated with. If you happen to be near the area, you might be able to triangulate it further with latency checks, but you'd need understanding of how the network is laid out.

That gets you in the ballpark with publicly accessible information, and then it's just a matter of getting the relevant parties to connect that to an address or a name. If the ISP allocates them in a predictable manner, you may not need the ISP to narrow it down.

This mostly applies to IPv4, IPv6 is another beast entirely. But most people are still on IPv4 at home. For IPv6

1. Wikipedia shows IPs instead of usernames for anonymous edits, which the heritage foundation can see. Wikipedia now automatically creates “temporary accounts” for anonymous edits instead of showing the IP
2. Wikipedia blocks most VPN edits because they cull malicious edits by IP, so while possible, it’s difficult to make an edit from a VPN since the IP is likely shared with bad actors
3. See above. In an effort to limit malicious or nonhelpful edits, anonymous edits are shown by IP in the edit history, though this now stops that

I had a guy contact me about buying a Minecraft account a few months ago. It was an account held by a highschool friend of mine with a three-letter username that is a word, making it incredibly unique.

He identified the now-unmonitored email address associated with it, found that email in leaked logs from a forum, then searched for other hits from the same IP in the same time range. That forum access was from my house, so he found my email associated with it elsewhere.

He successfully identified another friend of ours at the same time. All from a single dynamic IP fifteen years ago.

Wikipedia blocks edits from pretty much all public VPNs and is very harsh with IP bans in general. They do allow edits without accounts though, so they show the IP so that an accountless user can be identified when making multiple edits or posting on the talk page. Hashing it would probably make more sense.

how can heritage foundation track an IP address to a particular person?

1. There are services that try to do this, although they're mostly inaccurate and a scam. I can't find the story, but there was such a service that many people used that erroneously led people to some dude's house. Instead of giving a wide area to indicate uncertainty, the service put a point in the middle. This guy lived there. So such services do exist.
2. It doesn't really matter if the person's name is associated with the IP. Just knowing the IP address of someone you hate can be enough to mess with them. I hope your home network is as secure as you think it is. I hope you don't play games and get DoSed during them. That happens to popular streamers sometimes.