It means Apple has the encryption keys to your backed-up data. So they can, in theory, access it, if the UK Gov demands that they do. That might never happen to you, but with ADP it would have been impossible, because even Apple can't access it.
Potentially. It really just means your data is stored unencrypted, so anybody that has access to Apple's servers can access your data. I don't believe any government has open access to Apple's servers, but they can get a warrant.
They always could. With advanced data protection they could not. The law mandated to add a backdoor to allow the government to also see encrypted data (which made the encryption insecure by definition). Apple refused to comply so you don’t even have the option to encrypt your backups now.
See https://support.apple.com/en-us/102651