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Wallets do not send the xpub directly to the Electrum server. Instead, they derive the addresses (--> script hashes) from the xpub and then request the balance for each individual address.

That's what I've heard too.
Electrum (client) doesn't leak your xpub to the Electrum server it connects to, and I'd assume neither does Sparrow.

Wallets do not send the xpub directly to the Electrum server.

Correct, my mistake, I didn't explain it exactly, just trying to make the connection by saying "it sends the xpub".

Here are more technical details:
https://electrum.readthedocs.io/en/latest/faq.html#does-electrum-trust-servers

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