is the data stored encrypted on the remote side, or is it accessible in plain form?
It's stored encrypted but with a public known default password. (See Sync & Backup Repository ins Dateisystem mounten)
client-side encryption or to set an encryption key.
This is not implemented yet.
What happens if my NAS fails — will I still be able to recover and decrypt my backup data?
Yes, the sync and backup utility is based on restic and syncthing. With the default password you can restore your data without a Ugreen NAS.