snapcraft remote-build will tarball up your sources, including the .git directory, if present. --git is no longer required.
Unfortunately, there is no filtering - if you don’t want to include certain files, I’d suggest (re)moving them prior to the build. This matches the behavior for non-remote snapcraft operation when pointing to local sources.
@benfrancis If you would like, consider filing a feature request (https://bugs.launchpad.net/snapcraft/+filebug). Maybe we can support a --apply-gitignore or similar flag in the future.