If you use Home Assistant in an isolated local network with no Internet access, you will have good privacy. However, I needed to be able to use my camera remotely from my phone. That's when using strong end-to-end encryption becomes critical.
Home Assistant seems to provide two options for remote access: https://www.home-assistant.io/docs/configuration/securing/
One option is to expose your instance to the Internet and using TLS/SSL to connect to it remotely. To me, that's risky since any machine exposed to the Internet is going to see more attack attempts and is harder to secure. The second option is to use their cloud. Here, they explain how remote access through their cloud works: https://www.nabucasa.com/config/remote/#security
They also mention its weaknesses:
"Before we talk about weaknesses, know that we will never abuse any weakness unless forced by a government entity. Our approach has one single weakness that is unavoidable: since we own the domain that hosts the remote connection, we are able to issue our own certificate and man-in-the-middle attack (MITM) remote connections. This would allow us to see all data passing through, including authentication tokens."
Privastead's use of MLS provides strong end-to-end encryption. And Privastead is not vulnerable to MITM attacks due to its secure pairing solution. I plan to write more about the security of Privastead including its pairing solution.