Yes, that will also be stored on SharePoint. If you select open in SharePoint you will see it in the SharePoint Folder associated with the Teams Channel (I.e. if you created the onenote notebook in General channel in Teams it will be in the folder General in SharePoint
@Christopher Hoard I looked for it as you said, however, I did not find it in either of the 2 channels that I have. For some reason, it is located in the Site Assets folder on that SP site. Weird. I knew it was in SP somewhere, just didn't know exactly where.