Timemachine backups to Encrypted APFS partition. Checkbox turn off encryption
Time Machine cannot backup to an APFS disk, because APFS doesn't support hard-linking, which is essential to Time Machine's operation.

From Apple KB - Types of disks you can use with Time Machine on Mac


  Important: You can back up from an HFS+ or APFS-formatted disk to an HFS+ disk; however, Time Machine can’t back up to an APFS-formatted
  disk. If you select a back up disk formatted as APFS, Time Machine
  offers to reformat it as HFS+.