I don’t know how they do this efficiently and at scale with lots of updates, but maybe this database is kinda small to begin with anyway and the updates are reasonably cheap to process relative to how many spam numbers are out there.
If the server can decrypt it, it's not really safe if you're assuming server is evil
If you read the docs, a perfectly valid implementation is an HTTP request that sends the unencrypted database to the client which then checks the numbers locally - it achieves equivalent security priorities. The advantage here is that the database can be large enough to make distribution less practical than just doing a lookup per number and that’s where the HE comes in.
Remember: evil in a security context means someone trying to actively circumvent your protection guarantees, but you’re making an assumption that the database needs to be secret when it may not as the privacy and security guarantees are about the client’s information. Apple isn’t necessarily saying the database is secret since it’s just “this phone number is likely spam”. Of course, it’s possible that the server itself can’t even generate a valid query. It’s possible Apple designed it such that the query has to be generated on a valid Apple device to begin with (since it has a chain of trust to each device manufactured).
That's the whole point of Homomorphic Encryption. There is a Wikipedia article for that.