Do they strip off HTTPS somehow?

Well yes, how else they can provide their services such as page caching, image optimizing, email address obfuscation, js minifications, ddos mitigation, etc unless they can see all data flowing between your server and your visitors in the clear?

Cloudflare is basically an MITM proxy. This blog post might be helpful if you want to know how mitm proxy works in general: https://vinodpattanshetti49.medium.com/how-the-mitm-proxy-works-8a329cc53fb