Just to post an update on this issue, I was in touch with Esri Support and while initially they said it was as expected, because true circular arcs do not, they are supposed to approximate the appearance by converting it to rings, it is a bug causing it to not do this now. The reply I got:
BUG-000160117 : Circular arcs in a feature layer with no z-values display as straight lines in ArcGIS Online.
It was introduced with the June 2023 update and the fix is planned for the October 2023 update (end of the month). Although ArcGIS Online does not technically support true curves, the expected behaviour is still that upon publishing, the true curves should be converted to rings with many vertices to appear as curves. The workaround for the bug is to export the data to a feature class with z-values enabled and then publish it to ArcGIS Online.
So hopefully this will be fixed shortly.
UPDATE OCT 31, 2023: As of the update on October 25th, it appears to be fixed.