Encryption settings -- cloud connection vs LAN local connection

I have both local connections and cloud connections enabled.

Does the encryption setting in VNC Server only apply to local connections or does it affect cloud connections, too?

I prefer to have zero encryption for local connections as I'm using this in a home environment.  If I'm accessing remotely under most circumstances, then I'm using a WireGuard VPN back to my home network.  For any cloud-based connections where I might not be on my VPN, I want maximum encryption.

If they are indeed not separate, if I set it to maximum encryption (AlwaysMaximum), what kind of performance hit can I expect for bandwidth/throughput and CPU usage?

Thanks for any clarification anyone can provide.