Apple has a database trained on multiple photos of each landmark (or part of a landmark), to give a likelihood of a match.
Homomorphic encryption means that the encrypted mathematical form of a potential landmark from the phone can be applied to the encrypted set of landmark data, to get an encrypted result set.
The phone can then decrypt this and see the result of the query. But anyone else sees this as noise being translated to new noise, including Apple's server.
The justification for this approach is storage - the data set of landmarks can only get larger as the data set gets more comprehensive. Imagine trying to match photos for inside castles, cathedrals and museums as examples.