I just browsed ZFS Administration.
The manual clearly says one can encrypt the filesystem (aggregate) using zfsadm encrypt command - that's what is suggested in other places. However it is also possible to create new ZFS (VSAM) dataset using IDCAMS DEFINE CLUSTER KEYLABEL.
That means, the dataset content will be encrypted.
Q: what about format with -encrypt option - is it another encryption at the filesystem level?

Note: your "regular" ZFS can be encrypted using zfsadm command or formatted (new one) using format command. No need to create encrypted VSAM cluster.

And something interesting: Encrypted datasets have to be SMS-managed, however ZFS need not to be.

--
Radoslaw Skorupka
Lodz, Poland

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