GDE doesn’t use Google Docs to display your files – this is a common misconception. It uses the Google Docs Viewer to embed standalone files (from outside Google Docs). See Notes.
As such the files you embed using GDE are not “private” though you can prevent them from being searchable in Google using normal means (robots.txt file being most common).
To embed files using GDE and keep the files otherwise as “private” as possible, here is a suggested workflow (adapt to your needs):
Upload the supported file(s) to a folder on your web site.
Exclude that folder from search engine indexing (usually by robots.txt file).
Use the Enhanced Viewer option in GDE to hide the “full screen” button from the viewer toolbar. (This blocks the full screen view which includes an obvious “download” button. You may also wish to disable the download link the plugin inserts by default, either globally in GDE Settings or individually by adding to the shortcode save="0".)
Use the “Mask URL” option (Download Link Options > Link Behavior) to obscure the true path to the file.
Note that a savvy user can bypass these restrictions without a lot of difficulty. There is no way at present to embed a truly private document using the Google Docs Viewer, therefore the plugin does not support this right now.