iCloud Private Relay vs network blocking encrypted DNS traffic

I have iCloud Private Relay turned on. In the DNS settings it says that DNS is routed by Private Relay. This all sounds fine.

Now I've noticed that iOS presents a privacy warning for my WiFi that says that my network operator blocks encrypted DNS traffic. It says so only at wifi-level. The warning is nowhere near Private Relay.

I'm a bit confused as to what it means. Does it mean that Private Relay-routed DNS queries are not really encrypted? Or does it mean that only DNS traffic that is not handled by Private Relay (non-Safari, apps etc.) will not be encrypted?