Bear in mind that "redaction" just means any effort to protect sensitive information by obscuring text. I don't think I've seen pixelation used to redact text in any corporate/governmental context, but I've definitely seen people use it on sites like Reddit or Twitter to try to hide their name or other info.

I've also seen people try to redact sensitive information by poorly scribbling it out using the pencil tool on their phone, leaving enough parts of letters visible to guess what was originally there, or try to "black out" text using a brush that wasn't fully opaque, allowing it to be revealed by adjusting the contrast. Basically, a lot of people don't know how to safely redact stuff.

I don't think pixelation is commonly used because most people probably don't know how to use it, but my Samsung phone's built-in image editor also has a pixelation feature, so I honestly expect to see it pop up more often in the future.