The schematic looks much better now.
On itself there is nothing wrong with drawing a hierarchical schematic, but it has to be done in an intelligent way. For me that means a complete block schematic on the first page, and then further details in the blocks themselves.
One thing I do not like is drawing rectangles around all schematic sections.
These rectangles do not add anything to a schematic. A bit of emptiness around schematic sections Makes the separation of the parts just as clear without adding clutter. Another disadvantage of such rectangles is that they often have to be changed during updates and modifications of the schematic, and this is mostly just wasted time.
Adding captions to schematic sections is a good idea, but I usually make the letters a bit bigger to pull some attention to them, and this also makes them readable when zoomed out.
The next (also small) thing is the use of wire labels to make connections.
It's always a bit of a struggle to find a balance. If you make too many connections with only labels, you have to search a lot around the schematic (your pdf has searchable text, so that helps). Drawing all wires sometimes is more of a clutter, and it prevents you from using the space on the paper effectively. This is especially clear on the uC page, with the encoders and the "output switch" drawn all above each other and attached with long wires.
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This new version of the control loop is indeed what I meant. It is very similar to most power supply designs. However, getting to a good and working design from this start can be quite a challenge. You want the power supply to react quickly to changes, and this can lead to instability. There are already thousands of similar schematics on the 'net. Some from service manuals of professional power supplies, others from cheaply built or badly designed power supplies.
I see you used 1k resistors to filter the encoder signals, but 100k for the switches. 100k does seem a bit much (but it probably still works).
Bourns has made an application note for their encoders, I think it uses 10k resistors all around. (the exact value is not very critical, but 10k limits currents to 500uA (@5V).
I see you use an USB-C connector, but have only a 1W isolated converter to charge the battery.
Implementing full USB-C power delivery may be a bit much, but adding a connector for an external power delivery brick should be easy. This would allow both for quicker charging, and for using the power supply without a battery.