I know miners are incentivized to verify and propagate transactions for their own benefit (by hopefully publishing it on their block before other miners do). But when a transaction is initially created, e.g. from a wallet that happens to only share a single (non-miner) peer, what incentive does this node have for propagation of the transaction to the rest of the network? Especially since the majority of the network is composed of non-mining nodes, where does this implied trust that they will reliably flood to all known neighbors come from?
The incentive to propagate a transaction is so that adjacent peers cannot distinguish what transactions actually belong to the origin node.
Since all nodes by default relay all fee-paying transaction, it is not possible for a malicious actor to determine which transaction actually belongs to you as transaction that contain your inputs/outputs of interest will be masqueraded among transactions of interest to anonymous peers. This implicitly grants you more privacy since it makes it harder for a malicious observer to correlate transactions to your peer identity (e.g. ip address).