I am not authoritative, but a glance at the documentation suggests encryption is not explicitly part of this spec. Since a blob may be anything, one instance of a blob can be a file encrypted by external means.
I believe Private by default just indicates that objects are not exposed until they are shared: like a file system is private by default and a Github repo is not.
Looks like there is an encrypt module that uses AES-128: http://camlistore.org/pkg/blobserver/encrypt/. The modules are composable so you could encrypt your remote replicas of the main store (or hopefully all of them?)
I believe Private by default just indicates that objects are not exposed until they are shared: like a file system is private by default and a Github repo is not.