Once, youtuber hbomberguy asked a bunch of funny rhetorical questions about the Doctor Who episode Twice Upon A Time. Years later, I watched the episode, rewatched his video, got real mad at how lousy his questions actually were, answered every single one of them, and took time out for a few more questions like "Is Steven Moffat actually a fantastic lesbian feminist ally?" and "what's the deal with the Egyptian statue in LOST?"
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Why didn't the entity just explain itself and make it clear it didn't have any ulterior motives the way it happily did once the Doctor asked a Dalek to Google it for him?
It's in the episode.
Why did it threaten him at all considering that it has the memories of everyone who ever died so it knows all about him and knows that he's a peaceful guy who doesn't need to be threatened?
It's in the episode, and also you just rephrased the first question and asked it again.
Look, this won't even be the last time we get the first question rephrased, so let me just answer the underlying question of "why is there conflict between the Doctor and Testimony when neither wishes to harm the other" here, with the answer in the show, which is dramatically foreshadowed in a short scene, then paid off with the twist reveal.
Twice Upon a Time is about the 12th Doctor, the 1st Doctor, and Some Guy (a WW1 soldier) getting arbitrarily thrown together and seemingly menaced by a weird glassy alien technology called Testimony. Testimony has plucked the soldier from the timestream to record his memories directly before the moment of his death, as it claims to do with ALL the dead, throughout history. An accident prevented him from being returned to the moment of his death, and now Testimony hopes to fix that error (necessitating his death). To make matters more distressing for the Doctor, Testimony has seemingly resurrected Bill, who died in shocking fashion in the finale (don't worry, she got better through the power of gay love, but the Doctor doesn't know that). He announces his intention to escape with the possibly ersatz Bill and the soldier, and boasts that if he doesn't like what Testimony is doing he will come back and put a stop to it. The 1st Doctor peevishly asks just who the hell his later iteration thinks he is, to make such grandiose statements.
Testimony shows them, in the form of a surround sound clip show. He is the Doctor of War, responsible for innumerable final moments stored within the vast database of the universe's dead.
This is, simply, why Testimony treats the Doctor distrustfully and with some hostility, and then embodies itself in Bill in order to follow the Doctor and learn more about him. Testimony's whole perspective on the Doctor is defined by the Doctor at his most violent. It most certainly DOES NOT "know he's a peaceful guy". Probably a lot of its record of him is as the last thing soldiers from both side of the Time War saw before he obliterated them. It also doesn't... really threaten him particularly much? Ultimately it wishes to understand the Doctor better, and so spins up an instance of Bill to study him and see what he does next. The Doctor meanwhile didn't give it much of a chance to explain itself, which is another solid, shorter answer: the Doctor was too busy jumping to conclusions to give it a chance to explain itself.
A third, also useful answer, is: because there needs to be a plot for the episode to take place.
