Delete from decrypted folder doesn't go to trash

If I delete a file from the decrypted folder (or drag it to trash) the only option is to completely delete it. If I copy to the desktop, it can be deleted from there. I have Windows 11 64 bit. This happens with 1.7.1 and also earlier version.

Yes, this is how windows is handling the deletion of files from notwork shares. And the virtual drive is considered as one.

And I have read that you cannot restore it either via onedrive unless you have the exact time stamp - which means I would have to resort to periodic backups on an external hard drive. That would make cryptomator useless to me (unlike boxcryptor where onedrive backups were easily accessible). Am I getting that right? Thanks.

Yes. due to file-/foldername obfuscation its not that ease to restore a messed up vault.
Often cloud storage providers offer a function to restore files/folders from their recycle bin to the place they werde before deletion, but I would not count on that.
No matter which tool you use, ist always a good idea to have a backup of your files outside an online storage. I recommend a 3-2-1 backup strategy.