Will this command ensure that overlay traffic between service tasks is encrypted?

 The command docker network create -d overlay -o encrypted=true  will ensure that overlay traffic between service tasks is encrypted. This command creates an overlay network with the encryption option enabled, which means that Docker will create IPSEC tunnels between all the nodes where tasks are scheduled for services attached to the overlay network. These tunnels use the AES algorithm in GCM mode and manager nodes automatically rotate the keys every 12 hours1. This way, thedata exchanged between containers on different nodes on the overlay network is secured. References:

Overlay network driver