It’s important to note here that even if you turn on this option, Apple does not support full end-to-end encryption, there are still multiple factors that they keep under standard data protection which means they still have the encryption keys. They keep this under the guise of deduplication so they can save on storage costs but some examples of this are:

• the apps+file formats you have installed
• your phone’s make model and serial number
• most metadata that defines what an item represents such as date time modification time
• all file checksums (this is scary imo)

They explain how everything with their encryption works here