It is important to have a privacy policy for your website.  The privacy policy can explain a number of ways that you might use the data that is collected on your website.  Some of this data maybe collected indirectly like website analytic statistics.  There are also different legal requirements in different countries that need to be addressed in a privacy policy.  Finally it is just good practice to inform your website visitors about how you handle their data and privacy.

A website privacy policy is just a dedicated website page that displays your policy.  The typical way is to provide a link in your website footer to the privacy policy.

The actual privacy policy is a type of contact so you should get legal counsel on what it should contain.  There are also many websites that post templates that you can modify for your website.