More or less. Either Excalidraw for your quick and dirty diagrams or I've used PlantUML + C4 Plug-in for your larger, more long lived diagrams with some success.

I manually redraw my service architecture because I can create higher quality documentation than when trying to auto-generate it.

But you can get a baseline depending on which Cloud you use. For example, in AWS you can use workload discovery - that generates a system overview.

Bonus (optional) question: Is there a way to handle schema updates? For example generate code from the documentation that triggers a CI build in affected repos to ensure it still works with the updates.

Yes, for example, if your build server exposes the API with an OpenAPI scheme, you can use the build server to generate a client library like a nuget or npn.

Then in the API consumer you can add a build step that checks if there are new version of the client library. Or setup dependabot that creates PRs to update those dependencies