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This is in the Known Impacts section of the Release Notes at https://www.ixsystems.com/blog/library/freenas-11-3-release/.
The system no longer allows moving the system dataset to an encrypted pool containing a passphrase. Since Directory Services and some SMB state information is stored in the system dataset, these services will not function correctly if the system dataset is locked or otherwise unavailable. It is recommended to move the system dataset to a non-encrypted pool or an encrypted pool not containing a passphrase.
To be on the safe side, remove passphrases, and generate a new recovery key for all GELI-encrypted pools BEFORE upgrading. Too many folks have been bitten by this and lost their pools.
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