OS X Mountain Lion: About FileVault disk encryption
You can use FileVault to protect the files on your disk from being seen or copied. FileVault disk encryption encodes the information stored on your disk so it can’t be read unless the login password is entered.
If you store sensitive information on your Mac, you should consider using FileVault disk encryption. For example, if you carry all your company’s financial data on your portable computer, losing it could allow someone to access sensitive data that might hurt your business. If you are logged out when your computer is lost but the data is encrypted, your information is protected.
The disk encryption in OS X uses the government-approved encryption standard, the Advanced Encryption Standard with 128-bit keys (AES-128).
To ensure security when you turn on FileVault, other security features are also turned on. For example, a password is required to log in, after waking from sleep, and after leaving the screen saver. After the initial startup, only users enabled in FileVault can log in; other users need an administrator to log in first.
FileVault disk encryption cannot be used with some highly partitioned disk configurations, such as RAID disk sets.