The data on your Mac is stored encrypted so that if your Mac is stolen, no one can extract the storage and read your personal information stored on your Mac.
When the Mac reads the data during backup, it is decrypted as it is read into memory. Then when it is written to the backup drive, the data is NOT re-encrypted, so anyone that steals your backup drive will be able to read your personal information.
It is possible to tell macOS that it should also encrypt the backup drive as well.
Keep your Time Machine backup disk for Mac secure - Apple Support