Doesn’t the ESP32 module this project is using require the same thing?

Elerium-115?

Sure, but there’s still no excuse for “store the password in plaintext lol”. Once you’ve got user access, files at rest are trivial to obtain.

You’re proposing what amounts to a phishing attack, which is more effort, more time, and more risk. Anything that forces the attacker to do more work and have more chances to get noticed is a step in the right direction. Don’t let perfect be the enemy of good.

No, defense in depth is still important.

It’s true that full-disk encryption is useless against remote execution attacks, because the attacker is already inside that boundary. (i.e., As you say, the OS will helpfully decrypt the file for the attacker.)

However, it’s still useful to have finer-grained encryption of specific files. (Preferably in addition to full-disk encryption, which remains useful against other attack vectors.) i.e., Prompt the user for a password when the program starts, decrypt the data, and hold it in RAM that’s only accessible to that running process. This is more secure because the attacker must compromise additional barriers. Physical access is harder than remote execution with root, which is harder than remote execution in general.

Simple solution: Don’t connect it to the Internet. Hackers hate this one weird trick.