Most of my files are private but not sensitive, so I basically just trust them for those. A few sensitive files, which don't fit on the encrypted VPS, are encrypted classically using Veracrypt. I hope Nextcloud will support encrypting externally in the future, but for my use case it's not a big deal.
Yes, it gets synched just like any other file inside my Nextcloud. However, if you have to often change the data inside, it might not be a suitable solution, since the file has to be uploaded as a whole. If it's a big container, it might be cumbersome to upload a few gig each time you make a small change.