How are the icons downloaded?

So, am I understanding correctly, that if I save a password for a private web site behind vpn, like my-company-task-tracker.com or my-company-db.private, then the domain is stored in your servers in plain text?

Then it would be nice to have a feature to have not so rich, but more private icons, as for me, just .ico icons would be enough, like the ones, that are downloaded by keepassxc for example