...without enabling FileVault, a Mac merely has to be booted for the full-disk encryption to start working, even if it doesn’t automatically log into an account. While the encryption is locked to a hardware key managed by the Secure Enclave in the T2 chip, decryption kicks in as soon as the Mac boots to a login screen. A malicious party might be able to subvert macOS or use hardware methods to access data from the mounted and running drive.
Turn on FileVault, however, and a T2-equipped Mac engages in the same boot behavior as one that handles disk encryption in software. Instead of loading macOS directly, the Recovery partition boots in a special mode that requires entry of the password of any account allowed to use FileVault. Until that password is entered, the disk’s contents remain encrypted just as if it were at rest.