Hiding and protecting an Excel worksheet is NOT the same as full encryption. Protected workbooks can be encrypted and not available without the right password. Worksheets protected or hidden with a password are absurdly easy to view whether you have the password or not.
Excel has long had the ability to hide a worksheet (tab) from view and optionally require a password to unhide it.
Hide worksheet with password
Hide a worksheet by right-clicking on the tab and choosing Hide. Fit more tabs across an Excel workbook
Then Protect the workbook structure from Review | Protect | Protect Workbook and protect the workbook for Structure. Add a password.
(there’s also a VeryHidden worksheet option, only available via VBA).
Password doesn’t mean encryption
Even though the worksheet tab is hidden away and needs a password to be made visible does NOT mean the contents of that tab are encrypted.
All the worksheet contents are saved in the XLSX/XLSM file normally with no encryption.
How do we know?
We made an Excel file with a hidden worksheet and password protected the structure. Then opened up the XLSX file to look at the XML contents (all modern Office documents are ZIP files with a bundle of XML files inside).
Here’s the hidden & password protected worksheet file \xl\worksheets\sheet2.xml. The single cell contents ‘5678’ is there for all to see despite the password protection.
/xl/workbook.xml controls the visibility of the worksheets, note the ‘ state=”hidden” ‘ setting for one <sheet ….
The password appears to be in the same file and is the only part that is encrypted, using SHA-512.
Unprotecting a worksheet without the password is quite easy. There are free tools to do it like Password Protection Remover Pro or you can ‘DIY’ by opening up the XLXS/XLXM file and editing the workbook.xml file directly.
Compare that to a fully protected Excel workbook which can’t be opened without a password. The entire file is encrypted.
Protecting a workbook is different from protecting a sheet/tab
To be fair to Microsoft, there’s nothing in their documentation to suggest that Protecting a worksheet with a password is encrypting it.
However, many people would assume that using a password in modern Office apps meant some level of encryption.
After all, Protecting a whole workbook is Encryption to a high level (Microsoft 365 uses AES-256). But Protecting a worksheet is not encrypted at all.
A good rule of thumb is whether the password is optional or not. If the password is optional (e.g. Protecting a worksheet) there’s no encryption.