It is a common misunderstanding. E2EE (i.e. end to end encryption) is separate from "at rest" encryption. Essentially E2EE is only whilst the data is in transit i.e. when you sync you first encrypt it then once it gets to the other side it is decrypted but nobody in the middle can read it.
You can see a previous discussion this topic here - Using Joplin as a password manager?