Why can other users see my files in MY user folder?

This is because Finder creates new folder with default permissions set to 755, or rwxr-xr-x (I agree that's questionable behavior). This means that new folders in your home directory are readable (r) and executable (x) by both users not-only in the same group, but all users on the system.

You can lock down the access to just your user from Finder's Get Info dialog by removing the group access entry and setting the "everyone" entry to "No Access".

Alternately, you can use Terminal to chmod your directories with chmod 700 ~/your_directory to accomplish the same thing.

Get information on each folder and change the permissions at the bottom of the finder window. Make sure you are the owner and no groups or other owners can read the contents of the folders. The permissions should read “no access”

Why this happened could be many things, but locking it down is trivial with finder and also not hard at the command line.