This took some digging so posting Q&A for others to find.
ImageBackground is basically a <View> wrapping an <Image>.
The style prop only passes height and width to the <Image>.
To pass other style props use imageStyle.
<ImageBackground
style={{height: 100, width: 100}}
imageStyle={{ borderRadius: 6}}
source={{ uri: 'www.imageislocatedhere.com }}
>
The details are documented in the source code.