The keys to decrypt the kernel are in u-boot. u-boot's keys are in the low level boot loader, and the keys for that are sometimes burned in write-only fuses on the microcontroller itself. Other chips have OP-TEE or similar frameworks, and you just chain the keys all the way down to the initramfs and that data is wiped when you start init.
You're reliant on the capabilities of the chip that you're working with, and a flaw in that can unravel everything that you've done. In one case, I had to disable the on-chip boot agent once things were provisioned because of flaws in their implementation.
In short, a signed applet could be sent to the chip to do things like read/write NAND or NOR, set fuse bits, etc. When an unsigned applet was sent, it was rejected as expected but they neglected to clear the memory contents in this case. So you could send a malicious applet, let it be rejected, and then just tell it to execute. It's kind of a fascinating writeup if you want to know more [1].
In many cases, you don't need initramfs. I rarely use one in embedded systems.