End-to-End Encryption?? Other Option?

I’m in the process of resetting my iPhone and iPad due passcode issue, and can’t get pass the final step, “Update Apple ID Settings”. After going through the process IPAD asks for, then rejects my iPhone passcode, possibly due to the fact iPhone “Update Apple ID Settings” process cannot be completed. 

The message Reset Data Encryption keeps appearing and and appears to be the only remaining option. I’d like to know what happens when that option is selected bc conflicting answers have been given. 

Does my data disappear and become unrecoverable? Such as iCloud files, Health data, Google documents, and user id’s and passwords.

Looking forward to an answers.

Thanks

Kathleen