I believe this is inaccurate. Vercel env vars are all encrypted at rest (on their side). The 'sensitive' checkbox means you can't retrieve the value once it's set, which would have saved your ass in this case. Also, annoying to read an article like this without a single link to source material.
I think it's clear that some customers env vars got exposed, so that can only mean unencrypted, right?
If you spin up an EC2 instance with an ftp server and check the "Encrypt my EBS volume" checkbox, all those files are 'encrypted at rest', but if your ftp password is 'admin/admin', your files will be exposed in plaintext quite quickly.
Vercel's backend is of course able to decrypt them too (or else it couldn't run your app for you), and so the attacker was able to view them, and presumably some other control on the backend made it so the sensitive ones can end up in your app, but can't be seen in whatever employee-only interface the attacker was viewing.