See “Where’s my data stored?” in Help & Support.
Notes support E2E (End-to-End) encryption when synchronizing with Dropbox or Google Drive. See Enabling Encryption for instructions on how to configure it.
Data is encrypted using AES (Advanced Encryption Standard) with a 128 bits key. That key is derived from a password you choose. The derivation method used is PBKDF2 (Password Based Key Derivation Function 2). The actual key is never synchronized; it can only be derived using the password you chose.