Doesn't this sort of bypass the whole point of encryption in the first place?

No, homomorphic encryption allows a 3rd party to perform operations on encrypted data without decrypting it. The resulting answer is in encrypted form and can only be decrypted by whoever has the key.

Extremely oversimplified example:

Say you have a service that converts dollar amounts to euros using the latest exchange rate. You send the amount in dollars, it multiplies by the exchange rate and then returns the euro amount.

Now, let’s assume the clients of this service do not want to disclose the amounts they are converting. What they could do is pick a large random number and multiply the amount by this number. The conversion service multiplies this by the exchange rate and returns the ridiculously large number back. Then you divide thet number by the random number you picked and you have converted dollars to euros without the service ever knowing the actual amount.

Of course the reality is much more complicated than that but the idea is the same: you can perform operations on data in its encrypted form and now know what the data is nor the decrypted result of the operation.