IANAL but this doesn't seem unreasonable. The exact clause is: End User hereby grants Atlassian a non-exclusive license to copy, distribute, perform, display, store, modify, and otherwise use End User Data in connection with operating the Hosted Services. For me, the key is "in connection with operating the Hosting Service". They will need to do things with your data as they move it between servers and storage and ma…
Why do they need to modify the data? And why do they need to distribute it (assuming this is different from copying), and for that matter why do they need to use your source code?
Use it: I'm not sure, maybe to do syntax highlighting, they need to use the source code with a syntax highlighting software.