That seems like an excellent trade-off to me, a prime example of how Apple is great at picking the right trade-offs.
All what you said is completely irrelevant for the vast majority of people. So Apple doesn’t trade it off against the increased convenience both Spotlight and Versions give you.
In real life people do think of pieces of paper as having different levels of security or privacy. Some pieces of paper you can leave out on the coffee table, others get locked in a desk, and still others in a safety-deposit box.
Also, as separate point, your use of the word "trade-off" assumes that there is no alternative other than giving the user some complex privacy-aware UI or complicated procedures.
All what you said is completely irrelevant for the vast majority of people. So Apple doesn’t trade it off against the increased convenience both Spotlight and Versions give you.