Hi
Vnet peering Private and on the Microsoft hence the encryption is not required , however if the traffic is moving outside the boundary or not controlled by Microsoft as MSACSec Data Link Layer Encryption is used to encrypt the links and peering VNETs.
Read here abou the encryption applied on the links and data in transit - encryption-overview
regarding SnowFlak and MS there is possibility and read this Snowflake article it uses MS Backbone links - privatelink-azure.html
Hope this helps.
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