I know how VPN works I just don't know how it would work with Apple's privacy system now. That why I wondered what happens first. If Apple encrypts the data before it goes to VPN or not
VPNs can only mask your data while it's in transit. The connection is You → VPN → Website/Cloud → VPN → You. Your ISP can't see what websites you go to and websites can't see what ISP you are using from where. Your VPN will see both sides and they may or may not log that data. If you use application specific relay like tor, your VPN will only ba able to know that you are using tor without any other information. This article explains in more detail.