It's a feature of the Files app https://play.google.com/store/apps/details?id=com.google.and... which has over 100M installs.
Look at the 3rd screenshot.
ENCRYPTED FILE SHARING
Files’s offline file sharing is secured with WPA2 encryption, providing a more secure file transfer. Files app uses Bluetooth to set up encrypted and direct fast wifi connection, so that you can transfer app APK or large files in seconds, send videos or pictures to your friends. Safe and secure.
SHARE FILES OFFLINE
Share your pictures, videos, documents, or apps with others nearby who also have the app. With fast speed up to 480 Mbps, it’s fast, free, and it works without the internet, so it doesn’t cost mobile data. Just pair up your phone with anyone nearby who has Files app.