bitlearner
A Cryptomator vault works by encrypting your files locally on your device before they are uploaded to your Nextcloud.
Setting up Cryptomator you first create a vault, which is basically an encrypted folder. When this vault is locked, the vault appears as encrypted files and folders in Nextcloud - unreadable to anyone else (including the server).
When you unlock the Cryptomator vault with your password, Cryptomator mounts a virtual drive on your device and you can edit, add, delete files in this drive like in a normal folder.
Maybe you find these sources helpful:
https://cryptomator.org/guides/
https://docs.cryptomator.org/