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In addition to "encryption at rest", also consider that your devices might be exploited over the internet, so attackers may be able to access the decrypted state that way. To guard against that, you may wish to encrypt certain documents with an additional password, even if they are sitting on an encrypted file system.
Recall that within a month, the widely SSH was exploited and a backdoor added to every machine. I had upgraded to that SSH version. I didn't run an SSH server on that box, but it goes to show that even those who take precautions can end up exploited!
That's why I use most of the services via Wireguard (except Nextcloud that is behind Cloudflare and MQTTs that's completely exposed)
The XZ vulnerability was stopped in its tracks and did not really affect the majority of systems.
I also have a hard time believing local file encryption can be that effective. All they need to do is capture your keystrokes.
Itβs defense in depth. If I encrypt a rarely used file, capturing my keystrokes will eventually work, but it might be weeks or months before I return to decrypt that file. In the meantime, I might have realized I was hacked and restore the system.