But the traffic from the VPN server to the site/server you want to reach may or may not be encrypted, depending on whether it would or would not be encrypted if you were to access it directly.
As far as the end site/server is concerned, it gets requests from the VPN server, and so it cannot (easily) know that the request is really coming from your device’s IP address. This is how circumventing geographic restrictions works. If you want to access, say Netflix US, you’d use a VPN server with a US IP address, while you may be in some other country altogether. There are content providers who detect VPN usage and try to block them.
P.S.: There’s a lot of simplification in the above descriptions.
Edit: This page [1] has a good explanation on VPNs.