>Source for it being encrypted: https://support.apple.com/en-in/HT202303 (but it says iOS 13 is required for that).

Does it restore (by default) if you buy a new iPhone? If yes, then Apple stores a copy of your key to go along with the encrypted data. If it is restorable, it's technically encrypted, but in practice Apple (and whomever Apple decrees) have access to it anyway.

A more specific test would be to check if it restores once you remove all other iOS devices that could possibly share a key with you to decrypt it.

It's not much better if Apple controls the mechanism for key sharing anyway.

That might also explain why my iOS 12 iPhone stopped syncing that information with my other devices.