Haven't looked at the code, but my guess is that it calculates SHA256 of chunk, checks if this digest already exists, and if not, only then it encrypts and adds

Haven't looked at the code, but my guess is that it calculates SHA256 of chunk, checks if this digest already exists, and if not, only then it encrypts and adds a new chunk. Since SHA256 is take of plaintext, it indeed deduplicates, but also reveals some information to attackers.