Yes it does, it uses fuzzy perceptual hashes not crypto hashes.
So if your innocent baby pic looks similar enough to a previously tagged child abuse image then YES, it will flag you and send a copy to the feds.
And before you correct me, the Apple employee will see a picture of your naked baby and hit “forward to NCMEC”, which… upon investigation is actually just the feds
IF there are multiple matches, IF it's going to icloud, THEN a 'derivative image' will be show for screening and IF deemed to be warranted, sent to NCMEC.