Hi Techstarts,
From a backup perspective, the backup software is unaware of vSAN Encryption. Whether vSAN encryption is enabled/disabled at backup and viceversa on restore, the process works the same way as if there was no encryption at all. The behavior is different for VM backup where the data is encryption in-flight; however, this prevents some storage features from working such as dedupe/compression because the VM is encrypted.
I have done extensive testing with different scenarios with Veeam Encryption + vSAN Encryption and was not able to "break" it.
vSAN encryption is encryption at rest, and it is done when the data is being written to disk. So it may look and feel as if backups/restores are un-encrypted, but if you take a disk out, it will be encrypted, and unreadable. You can certainly use it in combination with software backup encryption, and let the backup software take care of the backup encryption. You can also use both vSAN encryption, and VM encryption (on different storage), leveraging the same KMS.