I'm about to create an encrypted sparse disk image on my HFS+ formatted hard drive, but then I wondered if APFS's drawbacks on HDDs will mean anything in this case, since the hardware is anyway on HFS+. Since the disk image is in software, I think APFS should do faster logical copying and decrypting because it's newer but I don't really know how this works.
It's more like the benefits/features of APFS won't mean anything. A lot of it takes advantage of the fact that random (arbitrary) locations can be read from a SSD with no "seek time" penalties you might get in an HDD
Creating a small disk image on a HDD might help disguise how much APFS slows down on a HDD if it's kept in one continuous piece, and the drive has a big cache, but 200GB image on a 1TB drive is only ever going to perform as well as the drive it's on minus overhead.